These Analysts Think Entertainment Network (India) Limited's (NSE:ENIL) Earnings Are Under Threat

The analysts covering Entertainment Network (India) Limited (NSE:ENIL) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Entertainment Network (India)'s three analysts is for revenues of ₹4.0b in 2022 which - if met - would reflect a substantial 39% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 95% to ₹1.15. Prior to this update, the analysts had been forecasting revenues of ₹4.7b and earnings per share (EPS) of ₹3.63 in 2022. There looks to have been a major change in sentiment regarding Entertainment Network (India)'s prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for Entertainment Network (India)

The consensus price target was broadly unchanged at ₹188, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Entertainment Network (India) at ₹213 per share, while the most bearish prices it at ₹160. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Entertainment Network (India) is an easy business to forecast or the underlying assumptions are obvious.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Entertainment Network (India)'s past performance and to peers in the same industry. One thing stands out from these estimates, which is that Entertainment Network (India) is forecast to grow faster in the future than it has in the past, with revenues expected to display 39% annualised growth until the end of 2022. If achieved, this would be a much better result than the 4.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. So it looks like Entertainment Network (India) is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest low-light for us was that the forecasts for Entertainment Network (India) dropped from profits to a loss this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Entertainment Network (India) after the downgrade.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Entertainment Network (India) analysts - going out to 2023, 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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