SeaWorld Entertainment, Inc. (NYSE:SEAS) 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. SeaWorld Entertainment has also found favour with investors, with the stock up a remarkable 11% to US$52.40 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 SeaWorld Entertainment's ten analysts is for revenues of US$1.5b in 2021, which would reflect a sizeable 70% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$3.03 in per-share earnings. Prior to this update, the analysts had been forecasting revenues of US$1.3b and earnings per share (EPS) of US$0.77 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
Despite these upgrades, the analysts have not made any major changes to their price target of US$62.30, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic SeaWorld Entertainment analyst has a price target of US$79.00 per share, while the most pessimistic values it at US$47.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SeaWorld Entertainment's past performance and to peers in the same industry. One thing stands out from these estimates, which is that SeaWorld Entertainment is forecast to grow faster in the future than it has in the past, with revenues expected to display 191% annualised growth until the end of 2021. If achieved, this would be a much better result than the 12% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 20% per year. So it looks like SeaWorld Entertainment is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So SeaWorld Entertainment could be a good candidate for more research.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple SeaWorld Entertainment analysts - going out to 2023, and you can see them 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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