Analysts Have Been Trimming Their GreenTree Hospitality Group Ltd. (NYSE:GHG) Price Target After Its Latest Report

GreenTree Hospitality Group Ltd. (NYSE:GHG) shareholders are probably feeling a little disappointed, since its shares fell 5.3% to US$2.49 in the week after its latest first-quarter results. It was a negative result overall, with revenues coming in 12% less than what the analyst expected, at CN¥352m. The analyst typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimate to see what could be in store for next year.

Check out our latest analysis for GreenTree Hospitality Group

Taking into account the latest results, GreenTree Hospitality Group's sole analyst currently expect revenues in 2024 to be CN¥1.59b, approximately in line with the last 12 months. Statutory earnings per share are predicted to surge 30% to CN¥3.75. Before this earnings report, the analyst had been forecasting revenues of CN¥1.70b and earnings per share (EPS) of CN¥3.60 in 2024. If anything, the analyst looks to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The analyst has cut their price target 5.7% to US$4.18per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.1% by the end of 2024. This indicates a significant reduction from annual growth of 9.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.8% annually for the foreseeable future. It's pretty clear that GreenTree Hospitality Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around GreenTree Hospitality Group's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.

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