These Analysts Just Made An Downgrade To Their Samsonite International S.A. (HKG:1910) EPS Forecasts

Today is shaping up negative for Samsonite International S.A. (HKG:1910) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Samsonite International from its twelve analysts is for revenues of US$2.2b in 2021 which, if met, would be a substantial 40% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 98% to US$0.013. Prior to this update, the analysts had been forecasting revenues of US$2.5b and earnings per share (EPS) of US$0.0076 in 2021. There looks to have been a major change in sentiment regarding Samsonite International's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for Samsonite International

Analysts lifted their price target 23% to US$2.40, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Samsonite International at US$22.09 per share, while the most bearish prices it at US$10.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. The analysts are definitely expecting Samsonite International's growth to accelerate, with the forecast 40% annualised growth to the end of 2021 ranking favourably alongside historical growth of 1.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Samsonite International to grow faster than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Samsonite International dropped from profits to a loss this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

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 Samsonite International going out to 2025, and you can see them 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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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.
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