Earnings Beat: Accel Entertainment, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Accel Entertainment, Inc. (NYSE:ACEL) just released its second-quarter report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 2.7% to hit US$309m. Accel Entertainment reported statutory earnings per share (EPS) US$0.17, which was a notable 11% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Accel Entertainment

Following last week's earnings report, Accel Entertainment's three analysts are forecasting 2024 revenues to be US$1.21b, approximately in line with the last 12 months. Statutory earnings per share are forecast to decline 15% to US$0.50 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.20b and earnings per share (EPS) of US$0.51 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$14.67, showing that the business is executing well and in line with expectations. 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 Accel Entertainment at US$15.00 per share, while the most bearish prices it at US$14.00. This is a very narrow spread of estimates, implying either that Accel Entertainment is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. We would highlight that Accel Entertainment's revenue growth is expected to slow, with the forecast 2.9% annualised growth rate until the end of 2024 being well below the historical 28% 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 9.6% annually. Factoring in the forecast slowdown in growth, it seems obvious that Accel Entertainment 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$14.67, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Accel Entertainment. Long-term earnings power is much more important than next year's profits. We have forecasts for Accel Entertainment going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Accel Entertainment you should know about.

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

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.

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