A week ago, Braemar Hotels & Resorts, Inc. (NYSE:BHR) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 5.6% better than analyst forecasts at US$45m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.55 per share, were 5.6% 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Braemar Hotels & Resorts' four analysts is for revenues of US$343.3m in 2021, which would reflect a major 24% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.75 per share. Before this earnings announcement, the analysts had been modelling revenues of US$338.3m and losses of US$1.53 per share in 2021. So it's pretty clear the analysts have mixed opinions on Braemar Hotels & Resorts even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.
Despite expectations of heavier losses next year,the analysts have lifted their price target 13% to US$5.05, perhaps implying these losses are not expected to be recurring over the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Braemar Hotels & Resorts, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$2.25 per share. 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. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Braemar Hotels & Resorts' growth to accelerate, with the forecast 24% growth ranking favourably alongside historical growth of 1.9% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Braemar Hotels & Resorts is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Braemar Hotels & Resorts. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that 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.
Following on from that line of thought, we think that 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 Braemar Hotels & Resorts going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 3 warning signs for Braemar Hotels & Resorts that you need to take into consideration.
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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