Analysts might have been a bit too bullish on GreenTree Hospitality Group Ltd. (NYSE:GHG), given that the company fell short of expectations when it released its third-quarter results last week. Results showed a clear earnings miss, with CN¥292m revenue coming in 8.2% lower than what analysts expected. Earnings per share (EPS) of CN¥1.01 missed the mark badly, arriving some 28% below what analysts had expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
Following the latest results, GreenTree Hospitality Group's six analysts are now forecasting revenues of CN¥1.35b in 2020. This would be a sizeable 24% improvement in sales compared to the last 12 months. Earnings per share are expected to bounce 34% to CN¥5.77. Yet prior to the latest earnings, analysts had been forecasting revenues of CN¥1.36b and earnings per share (EPS) of CN¥5.79 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of CN¥114, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on GreenTree Hospitality Group, with the most bullish analyst valuing it at CN¥128 and the most bearish at CN¥98.49 per share. 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 GreenTree Hospitality Group's rate of growth is expected to accelerate meaningfully, with forecast 24% revenue growth noticeably faster than its historical growth of 18%p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that GreenTree Hospitality Group is expected to grow much faster than its market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that GreenTree Hospitality Group'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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for GreenTree Hospitality Group going out to 2022, and you can see them free on our platform here.
We also provide an overview of the GreenTree Hospitality Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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