Today is shaping up negative for Saudi Automotive Services Company (TADAWUL:4050) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the current consensus, from the twin analysts covering Saudi Automotive Services, is for revenues of ر.س10b in 2025, which would reflect a measurable 6.1% reduction in Saudi Automotive Services' sales over the past 12 months. Statutory earnings per share are presumed to bounce 38% to ر.س1.09. Prior to this update, the analysts had been forecasting revenues of ر.س11b and earnings per share (EPS) of ر.س1.08 in 2025. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 12% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 30% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Saudi Automotive Services is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Saudi Automotive Services after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Saudi Automotive Services' financials, such as its declining profit margins. For more information, you can click here to discover this and the 2 other warning signs we've identified.

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 with high insider ownership.

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.