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Forecast: Analysts Think Accel Entertainment, Inc.'s (NYSE:ACEL) Business Prospects Have Improved Drastically

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Accel Entertainment, Inc. (NYSE:ACEL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 11% to US$13.46 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

After the upgrade, the six analysts covering Accel Entertainment are now predicting revenues of US$684m in 2021. If met, this would reflect a substantial 92% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$0.37 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$612m and earnings per share (EPS) of US$0.26 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Accel Entertainment

earnings-and-revenue-growth
earnings-and-revenue-growth

With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.7% to US$15.58 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Accel Entertainment at US$20.00 per share, while the most bearish prices it at US$13.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Accel Entertainment's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 138% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 18% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 22% per year. Not only are Accel Entertainment's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Accel Entertainment.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with Accel Entertainment, including dilutive stock issuance over the past year. You can learn more, and discover the 2 other concerns we've identified, for free on our platform here.

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.

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 editorial-team (at) simplywallst.com.