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One Boston Pizza Royalties Income Fund (TSE:BPF.UN) Analyst Just Made A Major Cut To Next Year's Estimates

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Simply Wall St
·3 min read
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The analyst covering Boston Pizza Royalties Income Fund (TSE:BPF.UN) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Boston Pizza Royalties Income Fund's lone analyst is for revenues of CA$37m in 2021, which would reflect a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 132% to CA$1.02. Previously, the analyst had been modelling revenues of CA$41m and earnings per share (EPS) of CA$1.20 in 2021. Indeed, we can see that the analyst is a lot more bearish about Boston Pizza Royalties Income Fund's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Boston Pizza Royalties Income Fund


The average price target climbed 8.3% to CA$13.00 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

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 Boston Pizza Royalties Income Fund's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 12%, well above its historical decline of 2.0% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 26% next year. Although Boston Pizza Royalties Income Fund's revenues are expected to improve, it seems that the analyst is still bearish on the business, forecasting it to grow slower than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Boston Pizza Royalties Income Fund. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Boston Pizza Royalties Income Fund.

Worse, Boston Pizza Royalties Income Fund is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. You can learn more about our debt analysis for free on our platform here.

You can also see our analysis of Boston Pizza Royalties Income Fund's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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