As you might know, Tourism Holdings Limited (NZSE:THL) just kicked off its latest annual results with some very strong numbers. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus, from the three analysts covering Tourism Holdings, is for revenues of NZ$328.0m in 2021, which would reflect an uncomfortable 18% reduction in Tourism Holdings’ 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. Before this earnings report, the analysts had been forecasting revenues of NZ$343.0m and earnings per share (EPS) of NZ$0.03 in 2021. The analysts have made an abrupt about-face on Tourism Holdings, administering a small dip in to revenue forecasts and slashing the earnings outlook from a profit to loss.
The average price target was broadly unchanged at NZ$2.92, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 18%, a significant reduction from annual 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. 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..
Don’t forget that there may still be risks. For instance, we’ve identified 2 warning signs for Tourism Holdings that you should be aware of.
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