ر.س42.25: That's What Analysts Think Saudi Company for Hardware (TADAWUL:4008) Is Worth After Its Latest Results

Last week, you might have seen that Saudi Company for Hardware (TADAWUL:4008) released its second-quarter result to the market. The early response was not positive, with shares down 6.2% to ر.س36.85 in the past week. It was a negative result overall, with revenues coming in 19% less than what the analysts expected, at ر.س251m. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Saudi Company for Hardware

Taking into account the latest results, the current consensus from Saudi Company for Hardware's three analysts is for revenues of ر.س1.28b in 2022, which would reflect an okay 8.0% increase on its sales over the past 12 months. Earnings are expected to improve, with Saudi Company for Hardware forecast to report a statutory profit of ر.س0.87 per share. Before this earnings report, the analysts had been forecasting revenues of ر.س1.27b and earnings per share (EPS) of ر.س1.40 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target fell 13% to ر.س42.25, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Company for Hardware analyst has a price target of ر.س53.00 per share, while the most pessimistic values it at ر.س30.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Saudi Company for Hardware shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Saudi Company for Hardware's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Saudi Company for Hardware is forecast to grow faster in the future than it has in the past, with revenues expected to display 17% annualised growth until the end of 2022. If achieved, this would be a much better result than the 1.8% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 11% per year. So it looks like Saudi Company for Hardware is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Saudi Company for Hardware. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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.

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 forecasts for Saudi Company for Hardware going out to 2024, and you can see them free on our platform here.

You can also see whether Saudi Company for Hardware is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.