Shorn Like A Sheep: Analysts Just Shaved Their Global Eagle Entertainment Inc. (NASDAQ:ENT) Forecasts Dramatically
The latest analyst coverage could presage a bad day for Global Eagle Entertainment Inc. (NASDAQ:ENT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the three analysts covering Global Eagle Entertainment provided consensus estimates of US$594m revenue in 2020, which would reflect a not inconsiderable 9.6% decline on its sales over the past 12 months. Losses are expected to increase slightly, to US$1.70 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$669m and losses of US$1.20 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for Global Eagle Entertainment
The consensus price target fell 67% to US$0.50, implicitly signalling that lower earnings per share are a leading indicator for Global Eagle Entertainment's valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 9.6% revenue decline a notable change from historical growth of 12% 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 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Global Eagle Entertainment is expected to lag the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Global Eagle Entertainment. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Global Eagle Entertainment's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Global Eagle Entertainment going out to 2022, 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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