Trip.com Group Limited (NASDAQ:TCOM) Analysts Are Cutting Their Estimates: Here's What You Need To Know

The full-year results for Trip.com Group Limited (NASDAQ:TCOM) were released last week, making it a good time to revisit its performance. It looks like the results were pretty good overall. While revenues of CN¥18b were in line with analyst predictions, statutory losses were much smaller than expected, with Trip.com Group losing CN¥5.45 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Trip.com Group after the latest results.

View our latest analysis for Trip.com Group

Taking into account the latest results, the most recent consensus for Trip.com Group from 34 analysts is for revenues of CN¥24.1b in 2021 which, if met, would be a major 32% increase on its sales over the past 12 months. Per-share statutory losses are expected to explode, reaching CN¥0.29 per share. Before this earnings report, the analysts had been forecasting revenues of CN¥26.0b and earnings per share (EPS) of CN¥1.54 in 2021. There looks to have been a significant drop in sentiment regarding Trip.com Group's prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.

The average price target lifted 11% to US$42.29, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Trip.com Group, with the most bullish analyst valuing it at US$52.00 and the most bearish at US$19.10 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's clear from the latest estimates that Trip.com Group's rate of growth is expected to accelerate meaningfully, with the forecast 32% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Trip.com Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Trip.com Group to become unprofitable next year. They also downgraded their revenue estimates, although industry data suggests that Trip.com Group's revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Trip.com Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Trip.com Group going out to 2025, and you can see them free on our platform here..

Even so, be aware that Trip.com Group is showing 1 warning sign in our investment analysis , you should know about...

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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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