It’s been a mediocre week for Park Hotels & Resorts Inc. (NYSE:PK) shareholders, with the stock dropping 18% to US$18.26 in the week since its latest annual results. It looks like a credible result overall – although revenues of US$2.8b were in line with what analysts predicted, Park Hotels & Resorts surprised by delivering a statutory profit of US$1.44 per share, a notable 15% above expectations. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. With this in mind, we’ve gathered the latest statutory forecasts to see what analysts are expecting for next year.
Check out our latest analysis for Park Hotels & Resorts
NYSE:PK Past and Future Earnings, March 2nd 2020
Taking into account the latest results, the latest consensus from Park Hotels & Resorts’s eight analysts is for revenues of US$2.98b in 2020, which would reflect a credible 5.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to plummet 20% to US$1.15 in the same period. Before this earnings report, analysts had been forecasting revenues of US$3.10b and earnings per share (EPS) of US$1.46 in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.
Analysts made no major changes to their price target of US$25.20, suggesting the downgrades are not expected to have a long-term impact on Park Hotels & Resorts’s valuation. 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. Currently, the most bullish analyst values Park Hotels & Resorts at US$29.00 per share, while the most bearish prices it at US$19.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. Analysts are definitely expecting Park Hotels & Resorts’s growth to accelerate, with the forecast 5.4% growth ranking favourably alongside historical growth of 0.7% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 5.0% next year. Park Hotels & Resorts is expected to grow at about the same rate as its market, so it’s not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Analysts also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. 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.
With that in mind, we wouldn’t be too quick to come to a conclusion on Park Hotels & Resorts. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Park Hotels & Resorts analysts – going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Park Hotels & Resorts’s balance sheet, and whether we think Park Hotels & Resorts is carrying too much debt, for free on our platform here.
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