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Last week saw the newest second-quarter earnings release from Lemon Tree Hotels Limited (NSE:LEMONTREE), an important milestone in the company's journey to build a stronger business. Revenues of ₹1.5b fell slightly short of expectations, but earnings were a definite bright spot, with per-share profits of ₹0.67 an impressive 43% ahead of estimates. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Check out our latest analysis for Lemon Tree Hotels
Taking into account the latest results, the most recent consensus for Lemon Tree Hotels from seven analysts is for revenues of ₹7.37b in 2020, which is a huge 25% increase on its sales over the past 12 months. Earnings per share are expected to leap 36% to ₹0.73. Yet prior to the latest earnings, analysts had been forecasting revenues of ₹7.37b and earnings per share (EPS) of ₹0.75 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
The consensus price target held steady at ₹71.14, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Lemon Tree Hotels, with the most bullish analyst valuing it at ₹80.00 and the most bearish at ₹62.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how Lemon Tree Hotels forecasts compare to the wider market's forecast performance. Analysts are definitely expecting Lemon Tree Hotels's growth to accelerate, with the forecast 25% growth ranking favourably alongside historical growth of 13% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Lemon Tree Hotels to grow faster than the wider market.