It’s been a sad week for Summit Hotel Properties, Inc. (NYSE:INN), who’ve watched their investment drop 13% to US$9.86 in the week since the company reported its yearly result. It was an okay report, and revenues came in at US$549m, approximately in line with analyst estimates leading up to the results announcement. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Summit Hotel Properties from six analysts is for revenues of US$567.9m in 2020, which is a credible 3.4% increase on its sales over the past 12 months. Before this earnings result, analysts had predicted US$569.0m revenue in 2020, although there was no accompanying EPS estimate. It looks like the latest results have met analyst expectations and confirmed that the business is performing in line with expectations, given there’s been no real changes in the new revenue estimates.
We’d also point out that that analysts have made no major changes to their price target of US$12.71. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Summit Hotel Properties at US$14.00 per share, while the most bearish prices it at US$10.00. This shows there is still quite a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that Summit Hotel Properties’s revenue growth is expected to slow, with forecast 3.4% increase next year well below the historical 6.3%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 4.9% next year. So it’s pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Summit Hotel Properties.
The Bottom Line
The most important thing to take away from these updates is that analysts are definitely optimistic on the business, given that they’ve begun forecasting positive per-share earnings for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Summit Hotel Properties’s revenues are expected to perform worse than the wider market. 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.
We have estimates for Summit Hotel Properties from its six analysts , and you can see them free on our platform here.
You can also view our analysis of Summit Hotel Properties’s balance sheet, and whether we think Summit Hotel Properties is carrying too much debt, for free on our platform here.
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