The Consensus EPS Estimates For Southern Province Cement Company (TADAWUL:3050) Just Fell Dramatically

The analysts covering Southern Province Cement Company (TADAWUL:3050) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Southern Province Cement from its three analysts is for revenues of ر.س1.3b in 2023 which, if met, would be an okay 6.7% increase on its sales over the past 12 months. Statutory earnings per share are anticipated to reduce 6.0% to ر.س2.40 in the same period. Prior to this update, the analysts had been forecasting revenues of ر.س1.4b and earnings per share (EPS) of ر.س3.73 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

View our latest analysis for Southern Province Cement

The consensus price target fell 7.5% to ر.س52.50, with the weaker earnings outlook clearly leading analyst valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Southern Province Cement, with the most bullish analyst valuing it at ر.س55.20 and the most bearish at ر.س49.00 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Southern Province Cement's past performance and to peers in the same industry. We would highlight that Southern Province Cement's revenue growth is expected to slow, with the forecast 5.4% annualised growth rate until the end of 2023 being well below the historical 7.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. Factoring in the forecast slowdown in growth, it seems obvious that Southern Province Cement is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Southern Province Cement.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Southern Province Cement analysts - going out to 2025, and you can see them free 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 downgrading 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.