PPHE Hotel Group Limited (LON:PPH) Just Reported And Analysts Have Been Cutting Their Estimates

PPHE Hotel Group Limited (LON:PPH) just released its latest annual report and things are not looking great. Unfortunately, PPHE Hotel Group delivered a serious earnings miss. Revenues of UK£102m were 13% below expectations, and statutory losses ballooned 29% to UK£1.99 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for PPHE Hotel Group

Following the latest results, PPHE Hotel Group's three analysts are now forecasting revenues of UK£197.5m in 2021. This would be a huge 94% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 72% to UK£0.53. Before this latest report, the consensus had been expecting revenues of UK£227.1m and UK£0.30 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target lifted 5.1% to €15.12, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on PPHE Hotel Group, with the most bullish analyst valuing it at €17.26 and the most bearish at €10.97 per share. 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.

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. It's clear from the latest estimates that PPHE Hotel Group's rate of growth is expected to accelerate meaningfully, with the forecast 94% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 0.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that PPHE Hotel Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that PPHE Hotel Group's revenues are expected to grow faster than 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. We have estimates - from multiple PPHE Hotel Group analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for PPHE Hotel Group that we have uncovered.

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