Langham Hospitality Investments Limited (HKG:1270) Just Reported And Analysts Have Been Cutting Their Estimates

Investors in Langham Hospitality Investments Limited (HKG:1270) had a good week, as its shares rose 5.9% to close at HK$0.90 following the release of its full-year results. Revenues of HK$224m missed forecasts by 13%, but at least statutory losses were much smaller than expected, with per-share losses of HK$0.11 coming in 23% smaller than what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Langham Hospitality Investments

Taking into account the latest results, the current consensus from Langham Hospitality Investments' twin analysts is for revenues of HK$281.3m in 2022, which would reflect a major 25% increase on its sales over the past 12 months. Langham Hospitality Investments is also expected to turn profitable, with statutory earnings of HK$0.036 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of HK$369.8m and earnings per share (EPS) of HK$0.044 in 2022. Indeed, we can see that the analysts are a lot more bearish about Langham Hospitality Investments' prospects following the latest results, administering a pretty serious reduction to revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn that the analysts have cut their price target 10% to HK$0.91.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Langham Hospitality Investments' past performance and to peers in the same industry. One thing stands out from these estimates, which is that Langham Hospitality Investments is forecast to grow faster in the future than it has in the past, with revenues expected to display 25% annualised growth until the end of 2022. If achieved, this would be a much better result than the 24% annual decline 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 14% annually. Not only are Langham Hospitality Investments' 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 Langham Hospitality Investments. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Langham Hospitality Investments' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Langham Hospitality Investments. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Langham Hospitality Investments you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.