Earnings Update: Enjoy Technology, Inc. (NASDAQ:ENJY) Just Reported And Analysts Are Trimming Their Forecasts

Enjoy Technology, Inc. (NASDAQ:ENJY) just released its latest annual report and things are not looking great. It was a pretty negative result overall, with revenues of US$81m missing analyst predictions by 3.3%. Worse, the business reported a statutory loss of US$4.65 per share, much larger than the analysts had forecast prior to the result. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Enjoy Technology

Taking into account the latest results, the most recent consensus for Enjoy Technology from seven analysts is for revenues of US$167.2m in 2022 which, if met, would be a major 106% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 28% to US$1.33. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$195.2m and losses of US$0.85 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target fell 24% to US$6.71, implicitly signalling that lower earnings per share are a leading indicator for Enjoy Technology's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Enjoy Technology analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$4.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. The analysts are definitely expecting Enjoy Technology's growth to accelerate, with the forecast 106% annualised growth to the end of 2022 ranking favourably alongside historical growth of 34% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Enjoy Technology is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Enjoy Technology's revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Enjoy Technology's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Enjoy Technology going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Enjoy Technology (1 doesn't sit too well with us!) that you should be aware of.

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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.