The analysts covering Jet2 plc (LON:JET2) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the current consensus from Jet2's five analysts is for revenues of UK£1.6b in 2022 which - if met - would reflect a notable 18% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£2.2b in 2022. It looks like forecasts have become a fair bit less optimistic on Jet2, given the sizeable cut to revenue estimates.
See our latest analysis for Jet2
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. For example, we noticed that Jet2's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 18% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 58% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 33% per year. So although Jet2's revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Jet2 going forwards.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Jet2's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.
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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About AIM:JET2
Jet2
Engages in the leisure travel business primarily in the United Kingdom.
Very undervalued with flawless balance sheet.
