InterContinental Hotels Group PLC Just Beat EPS By 18%: Here's What Analysts Think Will Happen Next
Shareholders of InterContinental Hotels Group PLC (LON:IHG) will be pleased this week, given that the stock price is up 12% to UK£86.00 following its latest annual results. Revenues were US$2.2b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$4.41 were also better than expected, beating analyst predictions by 18%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for InterContinental Hotels Group
After the latest results, the 16 analysts covering InterContinental Hotels Group are now predicting revenues of US$2.30b in 2024. If met, this would reflect a modest 6.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 6.0% to US$4.29 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.28b and earnings per share (EPS) of US$4.22 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.6% to UK£69.39. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values InterContinental Hotels Group at UK£87.28 per share, while the most bearish prices it at UK£46.34. This shows there is still a bit of 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that InterContinental Hotels Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 6.2% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 2.7% a year 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 7.6% per year. So although InterContinental Hotels Group's revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for InterContinental Hotels Group going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for InterContinental Hotels Group that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
