As you might know, Monarch Casino & Resort, Inc. (NASDAQ:MCRI) just kicked off its latest quarterly results with some very strong numbers. Revenues and losses per share were both better than expected, with revenues of US$15m leading estimates by 5.6%. Statutory losses were smaller than the analystsexpected, coming in at US$0.24 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Monarch Casino & Resort after the latest results.
Taking into account the latest results, the current consensus, from the five analysts covering Monarch Casino & Resort, is for revenues of US$163.1m in 2020, which would reflect a definite 16% reduction in Monarch Casino & Resort's sales over the past 12 months. Statutory earnings per share are expected to plunge 71% to US$0.21 in the same period. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$157.4m and losses of US$0.38 per share in 2020. So we can see there's been a pretty clear upgrade to expectations following the latest results, with a modest lift to revenues expected to lead to profitability earlier than previously forecast.
It will come as no surprise to learn that the analysts have increased their price target for Monarch Casino & Resort 5.0% to US$45.80on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Monarch Casino & Resort, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$42.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Monarch Casino & Resort's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 16% revenue decline a notable change from historical growth of 3.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 20% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Monarch Casino & Resort is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts now expect Monarch Casino & Resort to become profitable next year, compared to previous expectations that it would report a loss. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Monarch Casino & Resort. Long-term earnings power is much more important than next year's profits. We have forecasts for Monarch Casino & Resort going out to 2022, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Monarch Casino & Resort 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.
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