Results: InterContinental Hotels Group PLC Exceeded Expectations And The Consensus Has Updated Its Estimates

Shareholders might have noticed that InterContinental Hotels Group PLC (LON:IHG) filed its full-year result this time last week. The early response was not positive, with shares down 4.5% to UK£83.56 in the past week. It looks like a credible result overall - although revenues of US$2.2b were in line with what the analysts predicted, InterContinental Hotels Group surprised by delivering a statutory profit of US$4.41 per share, a notable 18% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts 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 the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for InterContinental Hotels Group

Following the latest results, InterContinental Hotels Group's 16 analysts are now forecasting revenues of US$2.31b in 2024. This would be a reasonable 6.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to shrink 6.5% to US$4.27 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.30b and earnings per share (EPS) of US$4.29 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 5.4% to UK£73.25. It looks as though they previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values InterContinental Hotels Group at UK£87.27 per share, while the most bearish prices it at UK£57.17. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. One thing stands out from these estimates, which is that InterContinental Hotels Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 6.5% annualised growth until the end of 2024. If achieved, this would be a much better result than the 7.5% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.6% per year. So while InterContinental Hotels Group's revenues are expected to improve, it seems that it is expected to grow at about the same rate as the overall industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 InterContinental Hotels Group going out to 2026, 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 InterContinental Hotels Group you should know about.

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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.