It’s been a good week for Travel + Leisure Co. (NYSE:TNL) shareholders, because the company has just released its latest full-year results, and the shares gained 9.4% to US$60.43. Revenues were in line with expectations, at US$2.2b, while statutory losses ballooned to US$2.97 per share. Following the result, the 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. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Travel + Leisure
After the latest results, the eight analysts covering Travel + Leisure are now predicting revenues of US$2.97b in 2021. If met, this would reflect a major 38% improvement in sales compared to the last 12 months. Travel + Leisure is also expected to turn profitable, with statutory earnings of US$2.92 per share. In the lead-up to this report, the analysts had been modelling revenues of US$3.05b and earnings per share (EPS) of US$3.12 in 2021. It’s pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
What’s most unexpected is that the consensus price target rose 18% to US$66.31, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. 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. There are some variant perceptions on Travel + Leisure, with the most bullish analyst valuing it at US$76.00 and the most bearish at US$52.00 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Travel + Leisure is forecast to grow faster in the future than it has in the past, with revenues expected to grow 38%. If achieved, this would be a much better result than the 11% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 24% next year. So it looks like Travel + Leisure is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Travel + Leisure. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will 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 said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Travel + Leisure going out to 2024, and you can see them free on our platform here..
That said, it’s still necessary to consider the ever-present spectre of investment risk. We’ve identified 3 warning signs with Travel + Leisure (at least 1 which is a bit concerning) , and understanding these should be part of your investment process.
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