Playa Hotels & Resorts N.V. (NASDAQ:PLYA) Reported Earnings Last Week And Analysts Are Already Upgrading Their Estimates

As you might know, Playa Hotels & Resorts N.V. (NASDAQ:PLYA) just kicked off its latest second-quarter results with some very strong numbers. Sales crushed expectations at US$129m, beating expectations by 29%. Playa Hotels & Resorts reported a statutory loss of US$0.05 per share, which - although not amazing - was much smaller than the analysts predicted. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Playa Hotels & Resorts

Taking into account the latest results, the most recent consensus for Playa Hotels & Resorts from six analysts is for revenues of US$464.2m in 2021 which, if met, would be a huge 55% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 37% to US$0.98. Before this earnings announcement, the analysts had been modelling revenues of US$416.2m and losses of US$0.95 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.

There was no major change to the consensus price target of US$9.50, with growing revenues seemingly enough to offset the concern of growing losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Playa Hotels & Resorts at US$11.00 per share, while the most bearish prices it at US$6.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Playa Hotels & Resorts shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Playa Hotels & Resorts' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 140% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 7.9% a year 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 20% per year. So it looks like Playa Hotels & Resorts is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Playa Hotels & Resorts. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Playa Hotels & Resorts. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Playa Hotels & Resorts going out to 2023, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for Playa Hotels & Resorts you should know about.

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