Saudi Arabian Oil Company (TADAWUL:2222) investors will be delighted, with the company turning in some strong numbers with its latest results. Statutory revenue of ر.س527b and earnings of ر.س0.57 both blasted past expectations, beating expectations by 20% and 20%, respectively, ahead of expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Saudi Arabian Oil after the latest results.
Following last week's earnings report, Saudi Arabian Oil's nine analysts are forecasting 2027 revenues to be ر.س1.92t, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 2.3% to ر.س1.90. Yet prior to the latest earnings, the analysts had been anticipated revenues of ر.س1.85t and earnings per share (EPS) of ر.س1.86 in 2027. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.
Check out our latest analysis for Saudi Arabian Oil
Even though revenue forecasts increased, there was no change to the consensus price target of ر.س30.20, suggesting the analysts are focused on earnings as the driver of value creation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Saudi Arabian Oil at ر.س35.00 per share, while the most bearish prices it at ر.س27.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. We would also point out that the forecast 0.4% annualised revenue decline to the end of 2027 is roughly in line with the historical trend, which saw revenues shrink 0.5% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 1.1% per year. While Saudi Arabian Oil's negative revenue trend is expected to moderate, they are still expected to shrink next year albeit at a slower rate than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also upgraded their revenue estimates, and our data indicates it is expected to perform better than the wider industry. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Saudi Arabian Oil. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Saudi Arabian Oil analysts - going out to 2028, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Saudi Arabian Oil (1 shouldn't be ignored!) that you need to be mindful of.
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