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GreenTree Hospitality Group Ltd. Just Missed EPS By 22%: Here's What Analysts Think Will Happen Next

It's been a good week for GreenTree Hospitality Group Ltd. (NYSE:GHG) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.8% to US$13.13. It looks like a pretty bad result, all things considered. Although revenues of CN¥267m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 22% to hit CN¥0.81 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for GreenTree Hospitality Group

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earnings-and-revenue-growth

Taking into account the latest results, the current consensus from GreenTree Hospitality Group's six analysts is for revenues of CN¥1.42b in 2021, which would reflect a substantial 53% increase on its sales over the past 12 months. Per-share earnings are expected to surge 124% to CN¥5.47. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.44b and earnings per share (EPS) of CN¥5.68 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

The consensus price target held steady at CN¥114, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 GreenTree Hospitality Group at CN¥20.06 per share, while the most bearish prices it at CN¥15.20. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business 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. The analysts are definitely expecting GreenTree Hospitality Group's growth to accelerate, with the forecast 53% growth ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that GreenTree Hospitality Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. 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 in mind, we wouldn't be too quick to come to a conclusion on GreenTree Hospitality Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for GreenTree Hospitality Group going out to 2023, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for GreenTree Hospitality Group that you should be aware of.

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@simplywallst.com.

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