Ten Entertainment Group plc (LON:TEG) Just Released Its Annual Earnings: Here's What Analysts Think

It's shaping up to be a tough period for Ten Entertainment Group plc (LON:TEG), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. Revenues missed expectations somewhat, coming in at UK£36m, but statutory earnings fell catastrophically short, with a loss of UK£0.26 some 139% larger than what the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Ten Entertainment Group

After the latest results, the six analysts covering Ten Entertainment Group are now predicting revenues of UK£57.1m in 2021. If met, this would reflect a huge 57% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Ten Entertainment Group forecast to report a statutory profit of UK£0.035 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£60.0m and earnings per share (EPS) of UK£0.16 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.

The analysts made no major changes to their price target of UK£2.58, suggesting the downgrades are not expected to have a long-term impact on Ten Entertainment Group's 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 Ten Entertainment Group analyst has a price target of UK£3.10 per share, while the most pessimistic values it at UK£2.00. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Ten Entertainment Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 57% 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 13% annually. Not only are Ten Entertainment Group's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ten Entertainment Group. They also downgraded their revenue estimates, although industry data suggests that Ten Entertainment Group's revenues are expected to grow faster than the wider industry. The consensus price target held steady at UK£2.58, 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 Ten Entertainment Group analysts - going out to 2023, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Ten Entertainment Group that you need to be mindful of.

If you’re looking to trade Ten Entertainment Group, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.