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These Analysts Just Made An Incredible Downgrade To Their Ashford Hospitality Trust, Inc. (NYSE:AHT) EPS Forecasts

Simply Wall St
·3 min read

The analysts covering Ashford Hospitality Trust, Inc. (NYSE:AHT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the five analysts covering Ashford Hospitality Trust, is for revenues of US$1.1b in 2020, which would reflect a painful 27% reduction in Ashford Hospitality Trust's sales over the past 12 months. Losses are supposed to balloon 143% to US$3.84 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$1.4b and losses of US$0.62 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Ashford Hospitality Trust

NYSE:AHT Past and Future Earnings April 25th 2020
NYSE:AHT Past and Future Earnings April 25th 2020

The consensus price target fell 40% to US$1.51, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ashford Hospitality Trust, with the most bullish analyst valuing it at US$2.00 and the most bearish at US$0.75 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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 highlight that sales are expected to reverse, with the forecast 27% revenue decline a notable change from historical growth of 7.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ashford Hospitality Trust is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Ashford Hospitality Trust's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Ashford Hospitality Trust.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Ashford Hospitality Trust's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 4 other warning signs we've identified.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.