Earnings Miss: Arabian Contracting Services Company Missed EPS By 29% And Analysts Are Revising Their Forecasts

Arabian Contracting Services Company (TADAWUL:4071) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a pretty bad result, all things considered. Although revenues of ر.س304m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 29% to hit ر.س1.26 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Arabian Contracting Services

Taking into account the latest results, the consensus forecast from Arabian Contracting Services' five analysts is for revenues of ر.س2.01b in 2024. This reflects a major 64% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 40% to ر.س9.13. Before this earnings report, the analysts had been forecasting revenues of ر.س2.00b and earnings per share (EPS) of ر.س9.73 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at ر.س256, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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 Arabian Contracting Services, with the most bullish analyst valuing it at ر.س308 and the most bearish at ر.س215 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arabian Contracting Services' past performance and to peers in the same industry. It's clear from the latest estimates that Arabian Contracting Services' rate of growth is expected to accelerate meaningfully, with the forecast 48% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 18% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arabian Contracting Services to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Arabian Contracting Services. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at ر.س256, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Arabian Contracting Services going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Arabian Contracting Services that you need to take into consideration.

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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.