Cineplex Inc. Just Missed Earnings - But Analysts Have Updated Their Models

As you might know, Cineplex Inc. (TSE:CGX) recently reported its quarterly numbers. Statutory earnings per share fell badly short of expectations, coming in at CA$0.02, some 70% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at CA$350m. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Cineplex

After the latest results, the six analysts covering Cineplex are now predicting revenues of CA$1.33b in 2022. If met, this would reflect a decent 18% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 75% to CA$0.38. Before this latest report, the consensus had been expecting revenues of CA$1.40b and CA$0.29 per share in losses. So it's pretty clear the analysts have mixed opinions on Cineplex after this update; revenues were downgraded and per-share losses expected to increase.

The average price target was broadly unchanged at CA$16.00, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Cineplex analyst has a price target of CA$18.50 per share, while the most pessimistic values it at CA$15.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Cineplex's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 39% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 21% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 16% annually. So it looks like Cineplex is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Cineplex. They also downgraded their revenue estimates, although industry data suggests that Cineplex's revenues are expected to grow faster than the wider industry. The consensus price target held steady at CA$16.00, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cineplex analysts - going out to 2024, 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 Cineplex that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.