As you might know, Entercom Communications Corp. (NYSE:ETM) last week released its latest quarterly, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at US$297m, but statutory earnings fell catastrophically short, with a loss of US$0.07 some 75% larger than what the analysts had predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the consensus from Entercom Communications' four analysts is for revenues of US$1.11b in 2020, which would reflect a stressful 25% decline in sales compared to the last year of performance. Entercom Communications is also expected to turn profitable, with statutory earnings of US$0.27 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.18b and earnings per share (EPS) of US$0.24 in 2020. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the decent improvement in to the earnings per share numbers.
The average price target rose 6.7% to US$2.00, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. 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 Entercom Communications, with the most bullish analyst valuing it at US$3.50 and the most bearish at US$1.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 25%, a significant reduction from annual growth of 34% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.1% next year. It's pretty clear that Entercom Communications' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Entercom Communications' earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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 Entercom Communications going out to 2022, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we've spotted with Entercom Communications .
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