Shareholders will be ecstatic, with their stake up 29% over the past week following Braemar Hotels & Resorts, Inc.‘s (NYSE:BHR) latest quarterly results. The results don’t look great, especially considering that statutory losses grew 45% toUS$0.48 per share. Revenues of US$118m did beat expectations by 3.2%, but it looks like a bit of a cold comfort. Following the result, the 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Braemar Hotels & Resorts after the latest results.
Taking into account the latest results, the current consensus, from the four analysts covering Braemar Hotels & Resorts, is for revenues of US$283.8m in 2020, which would reflect a disturbing 38% reduction in Braemar Hotels & Resorts’ sales over the past 12 months. Losses are forecast to balloon 478% to US$3.97 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$331.3m and losses of US$2.95 per share in 2020. So there’s been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
The consensus price target fell 16% to US$5.35, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 Braemar Hotels & Resorts, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$2.75 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Braemar Hotels & Resorts’ past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 38% revenue decline a notable change from historical growth of 6.2% 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 5.2% annually for the foreseeable future. It’s pretty clear that Braemar Hotels & Resorts’ revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Braemar Hotels & Resorts going out to 2022, and you can see them free on our platform here..
And what about risks? Every company has them, and we’ve spotted 2 warning signs for Braemar Hotels & Resorts you should know about.
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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. Thank you for reading.