One of the biggest stories of last week was how Ashford Hospitality Trust, Inc. (NYSE:AHT) shares plunged 46% in the week since its latest full-year results, closing yesterday at US$1.00. It looks like the results were pretty good overall. While revenues of US$1.5b were in line with analyst predictions, statutory losses were much smaller than expected, with Ashford Hospitality Trust losing US$1.58 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following last week's earnings report, Ashford Hospitality Trust's five analysts are forecasting 2020 revenues to be US$1.50b, approximately in line with the last 12 months. Statutory losses are forecast to balloon 32% to US$1.07 per share. Before this earnings result, analysts had predicted US$1.52b revenue in 2020, although there was no accompanying EPS estimate. So we can see that while the consensus made no real change to its revenue estimates, analysts began providing loss per share estimates, suggesting the business' (lack of) earnings is becoming more crucial to the business case following these results.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average analyst price target dipped 11% to US$2.88, with analysts signalling that growing losses would be a definite concern. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Ashford Hospitality Trust, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$1.30 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
In addition, we can look to Ashford Hospitality Trust's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.2% a significant reduction from annual growth of 7.0% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 5.0% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Ashford Hospitality Trust to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us is that analysts expect Ashford Hospitality Trust to be lossmaking next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Ashford Hospitality Trust's revenues are expected to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Ashford Hospitality Trust's future valuation.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ashford Hospitality Trust analysts - going out to 2022, and you can see them free on our platform here.
You can also see whether Ashford Hospitality Trust is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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