Burger King India Limited (NSE:BURGERKING) Just Reported And Analysts Have Been Cutting Their Estimates

By
Simply Wall St
Published
May 30, 2021
NSEI:RBA
Source: Shutterstock

The full-year results for Burger King India Limited (NSE:BURGERKING) were released last week, making it a good time to revisit its performance. The statutory results were not great - while revenues of ₹4.9b were in line with expectations,Burger King India lost ₹5.47 a share in the process. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Burger King India

earnings-and-revenue-growth
NSEI:BURGERKING Earnings and Revenue Growth May 31st 2021

Following the latest results, Burger King India's four analysts are now forecasting revenues of ₹10.0b in 2022. This would be a major 103% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 75% to ₹1.35. Yet prior to the latest earnings, the analysts had been forecasting revenues of ₹11.0b and losses of ₹0.45 per share in 2022. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target was broadly unchanged at ₹174, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Burger King India at ₹250 per share, while the most bearish prices it at ₹115. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Burger King India's rate of growth is expected to accelerate meaningfully, with the forecast 103% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 19% p.a. 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 25% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Burger King India to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. 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 held steady at ₹174, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Burger King India going out to 2026, and you can see them free on our platform here.

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

If you’re looking to trade Burger King India, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.