DiamondRock Hospitality Company’s (NYSE:DRH) adverse earnings per share contraction is expected to be a single-digit -9.99% over the next three years. Presently, with an EPS of $0.494, we can expect an upcoming EPS of $0.445. I am going to look at the latest data on DRH to assess whether this adverse expected growth is reasonable. View our latest analysis for DiamondRock Hospitality
Troubled times ahead
The next couple of years are a potential rough ride for DiamondRock Hospitality. Analysts are predicting the earnings to slide down to $0.445 in the three year’s time from previous levels of around $0.494. This would be a decline of -9.99%, so it will be an interesting ride. During the same time and profits (net income) are predicted to reduce slightly from $99M to $89M in the next couple of years. In addition to this, at the current levels of revenue and profit, margins are certainly underwhelming.
Is this similar growth to the past?
The past can be a helpful indicator for future performance for a stock. We can determine whether this level of expected growth is too pessimistic or whether the company has consistently shown a negative trend. DRH’s earnings growth is expected to go downhill as analysts expect the triple-digit earnings growth in the previous couple of years to move into negative territory. As a well-established company, DRH could be exhibiting signs of potential market share loss or obsolete products to larger negative growth over time.
For DRH, there are three essential factors you should further examine:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is DRH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DRH is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of DRH? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.