Analysts Just Shipped A Substantial Upgrade To Their The ONE Group Hospitality, Inc. (NASDAQ:STKS) Estimates

The ONE Group Hospitality, Inc. (NASDAQ:STKS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. ONE Group Hospitality has also found favour with investors, with the stock up a remarkable 16% to US$11.00 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the latest consensus from ONE Group Hospitality's dual analysts is for revenues of US$265m in 2021, which would reflect a huge 29% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 195% to US$0.85. Prior to this update, the analysts had been forecasting revenues of US$220m and earnings per share (EPS) of US$0.32 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for ONE Group Hospitality

With these upgrades, we're not surprised to see that the analysts have lifted their price target 21% to US$14.50 per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values ONE Group Hospitality at US$17.00 per share, while the most bearish prices it at US$12.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that ONE Group Hospitality's rate of growth is expected to accelerate meaningfully, with the forecast 66% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 20% 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 20% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect ONE Group Hospitality to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, ONE Group Hospitality could be worth investigating further.

Analysts are definitely bullish on ONE Group Hospitality, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including its declining profit margins. You can learn more, and discover the 3 other concerns we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

If you decide to trade ONE Group Hospitality, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.