Analysts Just Made A Captivating Upgrade To Their Southern Province Cement Company (TADAWUL:3050) Forecasts

Southern Province Cement Company (TADAWUL:3050) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 6.3% over the past week, closing at ر.س54.20. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the latest consensus from Southern Province Cement's three analysts is for revenues of ر.س1.4b in 2023, which would reflect a solid 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 46% to ر.س3.73. Previously, the analysts had been modelling revenues of ر.س1.3b and earnings per share (EPS) of ر.س3.13 in 2023. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Southern Province Cement

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of ر.س60.70, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Southern Province Cement, with the most bullish analyst valuing it at ر.س67.20 and the most bearish at ر.س49.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Southern Province Cement's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 7.6% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Southern Province Cement to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at Southern Province Cement.

Better yet, our automated discounted cash flow calculation (DCF) suggests Southern Province Cement could be moderately undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.