Carrols Restaurant Group, Inc. Just Reported Earnings, And Analysts Cut Their Target Price
There's been a major selloff in Carrols Restaurant Group, Inc. (NASDAQ:TAST) shares in the week since it released its yearly report, with the stock down 22% to US$4.20. It looks like the results were pretty good overall. While revenues of US$1.5b were in line with analyst predictions, statutory losses were much smaller than expected, with Carrols Restaurant Group losing US$0.74 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Carrols Restaurant Group after the latest results.
See our latest analysis for Carrols Restaurant Group
Following the latest results, Carrols Restaurant Group's four analysts are now forecasting revenues of US$1.66b in 2020. This would be a notable 13% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 60% to US$0.29 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.67b and losses of US$0.20 per share in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average analyst price target dipped 13% to US$8.30, with analysts signalling that growing losses would be a definite concern. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Carrols Restaurant Group at US$10.00 per share, while the most bearish prices it at US$6.50. 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.
Further, we can compare these estimates to past performance, and see how Carrols Restaurant Group forecasts compare to the wider market's forecast performance. Next year brings more of the same, according to analysts, with revenue forecast to grow 13%, in line with its 13% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.4% per year. So although Carrols Restaurant Group is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Carrols Restaurant Group's revenues are expected to grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Carrols Restaurant Group. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Carrols Restaurant Group analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Carrols Restaurant Group's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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