Stock Analysis

Growth Investors: Industry Analysts Just Upgraded Their The ONE Group Hospitality, Inc. (NASDAQ:STKS) Revenue Forecasts By 24%

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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 forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 26% to US$11.79 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the upgrade, the current consensus from ONE Group Hospitality's dual analysts is for revenues of US$251m in 2021 which - if met - would reflect a sizeable 65% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$202m in 2021. It looks like there's been a clear increase in optimism around ONE Group Hospitality, given the sizeable gain to revenue forecasts.

See our latest analysis for ONE Group Hospitality

NasdaqCM:STKS Earnings and Revenue Growth May 14th 2021

Additionally, the consensus price target for ONE Group Hospitality increased 11% to US$10.50, showing a clear increase in optimism from the analysts involved. 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. There are some variant perceptions on ONE Group Hospitality, with the most bullish analyst valuing it at US$11.00 and the most bearish at US$10.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting ONE Group Hospitality is an easy business to forecast or the underlying assumptions are obvious.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that ONE Group Hospitality's rate of growth is expected to accelerate meaningfully, with the forecast 95% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 18% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% annually. 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 most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. The analysts also expect revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at ONE Group Hospitality.

That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect ONE Group Hospitality to be able to reach break-even within the next few years. You can learn more about these forecasts, for 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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