The ONE Group Hospitality, Inc. (NASDAQ:STKS) just released its quarterly report and things are looking bullish. ONE Group Hospitality delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$71m, some 16% above indicated. Statutory EPS were US$0.41, an impressive 273% ahead of forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from ONE Group Hospitality's dual analysts is for revenues of US$219.6m in 2021, which would reflect a modest 6.7% increase on its sales over the past 12 months. Per-share earnings are expected to increase 9.2% to US$0.32. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$219.6m and earnings per share (EPS) of US$0.32 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 21% to US$14.50despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of ONE Group Hospitality's earnings by assigning a price premium.
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. We would highlight that ONE Group Hospitality's revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2021 being well below the historical 20% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 20% annually. Factoring in the forecast slowdown in growth, it seems obvious that ONE Group Hospitality is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that ONE Group Hospitality's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for ONE Group Hospitality going out as far as 2022, and you can see them free on our platform here.
It is also worth noting that we have found 6 warning signs for ONE Group Hospitality (1 shouldn't be ignored!) that you need to take into consideration.
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