ر.س16.46: That's What Analysts Think Saudi Kayan Petrochemical Company (TADAWUL:2350) Is Worth After Its Latest Results

Investors in Saudi Kayan Petrochemical Company (TADAWUL:2350) had a good week, as its shares rose 8.5% to close at ر.س16.26 following the release of its second-quarter results. The results were positive, with revenue coming in at ر.س3.4b, beating analyst expectations by 8.9%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Saudi Kayan Petrochemical

Taking into account the latest results, the seven analysts covering Saudi Kayan Petrochemical provided consensus estimates of ر.س12.6b revenue in 2022, which would reflect a measurable 7.3% decline on its sales over the past 12 months. Statutory earnings per share are forecast to drop 19% to ر.س0.80 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ر.س12.7b and earnings per share (EPS) of ر.س0.80 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target fell 6.1% to ر.س16.46, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Saudi Kayan Petrochemical analyst has a price target of ر.س18.00 per share, while the most pessimistic values it at ر.س14.00. This is a very narrow spread of estimates, implying either that Saudi Kayan Petrochemical is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 14% by the end of 2022. This indicates a significant reduction from annual growth of 1.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 6.1% annually for the foreseeable future. The forecasts do look bearish for Saudi Kayan Petrochemical, since they're expecting it to shrink faster than the industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. The consensus also reconfirmed their revenue estimates, suggesting that sales are performing in line with expectations. Plus, our data suggests that Saudi Kayan Petrochemical is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Saudi Kayan Petrochemical. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Saudi Kayan Petrochemical analysts - going out to 2024, and you can see them free on our platform here.

Even so, be aware that Saudi Kayan Petrochemical is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.