CDL Hospitality Trusts (SGX:J85) just released its latest yearly report and things are not looking great. Results look to have been somewhat negative - revenue fell 2.7% short of analyst estimates at S$197m, and statutory earnings of S$0.093 per share missed forecasts by 4.5%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
After the latest results, the ten analysts covering CDL Hospitality Trusts are now predicting revenues of S$216.7m in 2020. If met, this would reflect a decent 10% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decrease 8.8% to S$0.085 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of S$218.1m and earnings per share (EPS) of S$0.093 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at S$1.71, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic CDL Hospitality Trusts analyst has a price target of S$1.89 per share, while the most pessimistic values it at S$1.50. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company 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. It's clear from the latest estimates that CDL Hospitality Trusts's rate of growth is expected to accelerate meaningfully, with forecast 10% revenue growth noticeably faster than its historical growth of 4.4%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 4.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that CDL Hospitality Trusts is expected to grow much faster than its market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CDL Hospitality Trusts. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that CDL Hospitality Trusts's revenues are expected to grow faster than the wider market. 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.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for CDL Hospitality Trusts going out to 2022, and you can see them free on our platform here..
You can also see whether CDL Hospitality Trusts is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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