Golden Entertainment, Inc. (NASDAQ:GDEN) just released its third-quarter report and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of US$205m leading estimates by 3.8%. Statutory losses were smaller than the analystsexpected, coming in at US$0.25 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Golden Entertainment's six analysts are now forecasting revenues of US$882.1m in 2021. This would be a substantial 21% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 85% to US$0.66. Before this latest report, the consensus had been expecting revenues of US$819.5m and US$1.31 per share in losses. So it seems there's been a definite increase in optimism about Golden Entertainment's future following the latest consensus numbers, with a the loss per share forecasts in particular.
The consensus price target rose 26% to US$21.50, with the analysts encouraged by the higher revenue and lower forecast losses for next year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Golden Entertainment analyst has a price target of US$26.00 per share, while the most pessimistic values it at US$18.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Golden Entertainment's revenue growth will slow down substantially, with revenues next year expected to grow 21%, compared to a historical growth rate of 27% over the past five years. Compare this to the 171 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 22% per year. Factoring in the forecast slowdown in growth, it looks like Golden Entertainment is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 Golden Entertainment going out to 2022, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Golden Entertainment , and understanding them should be part of your investment process.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.