What Does The Future Hold For Ten Entertainment Group plc (LON:TEG)? These Analysts Have Been Cutting Their Estimates

Market forces rained on the parade of Ten Entertainment Group plc (LON:TEG) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the five analysts covering Ten Entertainment Group provided consensus estimates of UK£39m revenue in 2020, which would reflect a concerning 41% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£44m in 2020. It looks like forecasts have become a fair bit less optimistic on Ten Entertainment Group, given the measurable cut to revenue estimates.

View our latest analysis for Ten Entertainment Group

We'd point out that there was no major changes to their price target of UK£2.64, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ten Entertainment Group's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 41% revenue decline a notable change from historical growth of 3.1% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that Ten Entertainment Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Ten Entertainment Group after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Ten Entertainment Group, including dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.

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