SpiceJet Limited (NSE:SPICEJET) Just Reported And Analysts Have Been Cutting Their Estimates

Investors in SpiceJet Limited (NSE:SPICEJET) had a good week, as its shares rose 2.2% to close at ₹52.05 following the release of its first-quarter results. Revenues of ₹5.2b came in 6.7% below estimates, but statutory losses were well contained with a per-share loss of ₹10.01 being some 19% smaller than what the analyst was predicting. The analyst typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

View our latest analysis for SpiceJet

After the latest results, the consensus from SpiceJet's one analyst is for revenues of ₹46.8b in 2021, which would reflect a substantial 53% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching ₹45.37 per share. Before this latest report, the consensus had been expecting revenues of ₹52.5b and ₹43.37 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analyst making a serious cut to their revenue outlook while also expecting losses per share to increase.

The consensus price target fell 8.0% to ₹53.19, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 53%, a significant reduction from annual growth of 20% 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 22% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - SpiceJet is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for 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. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of SpiceJet's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

You can also view our analysis of SpiceJet's balance sheet, and whether we think SpiceJet is carrying too much debt, for free on our platform here.

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