A week ago, Tourism Holdings Limited (NZSE:THL) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of NZ$401m, some 6.8% above estimates, and statutory earnings per share (EPS) coming in at NZ$0.19, 24% ahead of expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the three analysts covering Tourism Holdings provided consensus estimates of NZ$328.0m revenue in 2021, which would reflect a not inconsiderable 18% decline on its sales over the past 12 months. The company is forecast to report a statutory loss of NZ$0.077 in 2021, a sharp decline from a profit over the last year. Yet prior to the latest earnings, the analysts had been anticipated revenues of NZ$343.0m and earnings per share (EPS) of NZ$0.03 in 2021. There looks to have been a significant drop in sentiment regarding Tourism Holdings' prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.
There was no major change to the consensus price target of NZ$2.92, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Tourism Holdings analyst has a price target of NZ$3.79 per share, while the most pessimistic values it at NZ$2.20. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 18% revenue decline a notable change from historical growth of 12% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.8% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Tourism Holdings is expected to lag the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Tourism Holdings dropped from profits to a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Tourism Holdings going out to 2023, and you can see them free on our platform here..
Before you take the next step you should know about the 2 warning signs for Tourism Holdings that we have uncovered.
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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