Time To Worry? Analysts Just Downgraded Their Accor SA (EPA:AC) Outlook
One thing we could say about the analysts on Accor SA (EPA:AC) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the consensus from 16 analysts covering Accor is for revenues of €2.8b in 2020, implying a disturbing 31% decline in sales compared to the last 12 months. After this downgrade, the company is anticipated to report a loss of €0.41 in 2020, a sharp decline from a profit over the last year. Before this latest update, the analysts had been forecasting revenues of €3.1b and earnings per share (EPS) of €0.35 in 2020. So we can see that the consensus has become notably more bearish on Accor's outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
View our latest analysis for Accor
The consensus price target fell 5.4% to €31.94, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Accor, with the most bullish analyst valuing it at €45.90 and the most bearish at €20.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 31% revenue decline a notable change from historical growth of 2.1% 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 3.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Accor is expected to lag the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Accor dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Accor's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Accor.
Unfortunately, the earnings downgrade - if accurate - may also place pressure on Accor'smountain of debt, which could lead to some belt tightening for shareholders. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.
We also provide an overview of the Accor Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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