Analysts Have Just Cut Their Whitbread PLC (LON:WTB) Revenue Estimates By 11%

One thing we could say about the analysts on Whitbread PLC (LON:WTB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from 22 analysts covering Whitbread is for revenues of UK£688m in 2021, implying a disturbing 44% decline in sales compared to the last 12 months. Losses are expected to be contained, narrowing 12% from last year to UK£3.52. Yet before this consensus update, the analysts had been forecasting revenues of UK£776m and losses of UK£3.39 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Whitbread

There was no major change to the consensus price target of UK£31.05, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 Whitbread, with the most bullish analyst valuing it at UK£40.10 and the most bearish at UK£18.20 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. Over the past five years, revenues have declined around 13% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 44% decline in revenue next year. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 12% next year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Whitbread to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Whitbread going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Whitbread's financials, such as major dilution from new stock issuance in the past year. Learn more, and discover the 1 other concern we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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