The latest analyst coverage could presage a bad day for Inspired Entertainment, Inc. (NASDAQ:INSE), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After this downgrade, Inspired Entertainment's four analysts are now forecasting revenues of US$163m in 2020. This would be a credible 6.1% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$3.02 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$223m and losses of US$2.12 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Inspired Entertainment's past performance and to peers in the same industry. It's clear from the latest estimates that Inspired Entertainment's rate of growth is expected to accelerate meaningfully, with the forecast 6.1% revenue growth noticeably faster than its historical growth of 2.6% 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 13% per year. So it's clear that despite the acceleration in growth, Inspired Entertainment is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Inspired Entertainment's revenues are expected to grow slower than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Inspired Entertainment, and we wouldn't blame shareholders for feeling a little more cautious themselves.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Inspired Entertainment going out to 2022, and you can see them 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.
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