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US$4.50: That's What Analysts Think Good Times Restaurants Inc. Is Worth After Its Latest Results

Simply Wall St

Good Times Restaurants Inc. (NASDAQ:GTIM) shares fell 5.1% to US$1.48 in the week since its latest full-year results. It looks like the results were pretty good overall. While revenues of US$111m were in line with analyst predictions, losses were much smaller than expected, with Good Times Restaurants losing US$0.41 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent forecasts to see whether analysts have changed their earnings models, following these results.

See our latest analysis for Good Times Restaurants

NasdaqCM:GTIM Past and Future Earnings, December 14th 2019

Taking into account the latest results, the most recent consensus for Good Times Restaurants from dual analysts is for revenues of US$119.6m in 2020, which is a reasonable 8.0% increase on its sales over the past 12 months. Losses are forecast to balloon 80% to US$0.08 per share. Before this earnings announcement, analysts had been forecasting revenues of US$121.7m and losses of US$0.18 per share in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the very substantial lift in earnings per share expectations following these results.

The consensus price target fell 10.0% to US$4.50 despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on analyst valuations.

Further, we can compare these estimates to past performance, and see how Good Times Restaurants forecasts compare to the wider market's forecast performance. It's pretty clear that analysts expect Good Times Restaurants's revenue growth will slow down substantially, with revenues next year expected to grow 8.0%, compared to a historical growth rate of 25% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 7.2% per year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Good Times Restaurants to grow at about the same rate as the wider market.

The Bottom Line

The most important thing to note from these estimates is that the consensus increased its forecast losses next year, suggesting all may not be well at Good Times Restaurants. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Good Times Restaurants's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.

It might also be worth considering whether Good Times Restaurants's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.