Dar Al Arkan Real Estate Development Company Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

Investors in Dar Al Arkan Real Estate Development Company (TADAWUL:4300) had a good week, as its shares rose 2.0% to close at ر.س8.51 following the release of its third-quarter results. Dar Al Arkan Real Estate Development reported a serious revenue miss, with sales of ر.س391m falling a huge 44% short of analyst estimates. The bright side is that statutory earnings per share of ر.س0.28 were in line with forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Dar Al Arkan Real Estate Development

Taking into account the latest results, the most recent consensus for Dar Al Arkan Real Estate Development from twin analysts is for revenues of ر.س3.98b in 2021 which, if met, would be a sizeable 74% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 326% to ر.س0.29. Yet prior to the latest earnings, the analysts had been anticipated revenues of ر.س4.09b and earnings per share (EPS) of ر.س0.15 in 2021. Although the analysts have lowered their sales forecasts, they've also made a sizeable expansion in their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

The consensus has made no major changes to the price target of ر.س8.87, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Dar Al Arkan Real Estate Development's rate of growth is expected to accelerate meaningfully, with the forecast 74% revenue growth noticeably faster than its historical growth of 12%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 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dar Al Arkan Real Estate Development is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Dar Al Arkan Real Estate Development following these results. They also downgraded their revenue estimates, although industry data suggests that Dar Al Arkan Real Estate Development's revenues are expected to grow faster than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Dar Al Arkan Real Estate Development going out as far as 2023, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Dar Al Arkan Real Estate Development (1 can't be ignored!) that you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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