Analysts Are Upgrading TravelCenters of America Inc. (NASDAQ:TA) After Its Latest Results

TravelCenters of America Inc. (NASDAQ:TA) just released its quarterly report and things are looking bullish. Results overall were solid, with revenues arriving 7.3% better than analyst forecasts at US$1.5b. Higher revenues also resulted in substantially lower statutory losses which, at US$0.40 per share, were 7.3% smaller than the analysts expected. The analysts 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for TravelCenters of America

After the latest results, the three analysts covering TravelCenters of America are now predicting revenues of US$6.98b in 2021. If met, this would reflect a huge 38% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$0.12. Before this latest report, the consensus had been expecting revenues of US$5.95b and US$0.79 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Despite these upgrades,the analysts have not made any major changes to their price target of US$38.00, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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 TravelCenters of America analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$32.00. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that TravelCenters of America's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 53% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 0.006% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually. Not only are TravelCenters of America's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 estimates - from multiple TravelCenters of America analysts - going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for TravelCenters of America you should be aware of, and 2 of them can't be ignored.

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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. 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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