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Investors in Fiesta Restaurant Group, Inc. (NASDAQ:FRGI) had a good week, as its shares rose 9.6% to close at US$9.47 following the release of its third-quarter results. It looks like a credible result overall - although revenues of US$137m were what the analysts expected, Fiesta Restaurant Group surprised by delivering a (statutory) profit of US$0.18 per share, an impressive 414% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Fiesta Restaurant Group's twin analysts is for revenues of US$589.4m in 2021, which would reflect a satisfactory 4.2% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$0.36 per share. Before this earnings announcement, the analysts had been modelling revenues of US$601.8m and losses of US$0.02 per share in 2021. So it's pretty clear the analysts have mixed opinions on Fiesta Restaurant Group after this update; revenues were downgraded and per-share losses expected to increase.
There was no major change to the consensus price target of US$11.75, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.
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. One thing stands out from these estimates, which is that Fiesta Restaurant Group is forecast to grow faster in the future than it has in the past, with revenues expected to grow 4.2%. If achieved, this would be a much better result than the 2.5% annual decline 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 grow 22% per year. Although Fiesta Restaurant Group's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Fiesta Restaurant Group. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Fiesta Restaurant Group going out as far as 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Fiesta Restaurant Group you should know about.
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.
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