Stock Analysis

Analysts Just Shipped A Notable Upgrade To Their Ten Entertainment Group plc (LON:TEG) Estimates

LSE:TEG
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Celebrations may be in order for Ten Entertainment Group plc (LON:TEG) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

Following the upgrade, the most recent consensus for Ten Entertainment Group from its six analysts is for revenues of UK£52m in 2021 which, if met, would be a huge 44% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 84% to UK£0.042. Yet prior to the latest estimates, the analysts had been forecasting revenues of UK£47m and losses of UK£0.12 per share in 2021. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Check out our latest analysis for Ten Entertainment Group

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LSE:TEG Earnings and Revenue Growth July 14th 2021

Despite these upgrades, the analysts have not made any major changes to their price target of UK£2.93, implying that their latest estimates don't have a long term impact on what they think the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Ten Entertainment Group, with the most bullish analyst valuing it at UK£3.30 and the most bearish at UK£2.25 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Ten Entertainment Group shareholders.

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. For example, we noticed that Ten Entertainment Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 44% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 0.7% 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 15% annually. So it looks like Ten Entertainment Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Ten Entertainment Group's prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Ten Entertainment Group could be a good candidate for more research.

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 Ten Entertainment Group going out to 2023, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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