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News Flash: 3 Analysts Think The Marcus Corporation (NYSE:MCS) Earnings Are Under Threat

One thing we could say about the analysts on The Marcus Corporation (NYSE:MCS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Shares are up 5.4% to US$7.82 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the latest downgrade, the three analysts covering Marcus provided consensus estimates of US$293m revenue in 2020, which would reflect a concerning 48% decline on its sales over the past 12 months. Losses are supposed to balloon 411% to US$4.01 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$328m and losses of US$3.33 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Marcus

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Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 48%, a significant reduction from annual growth of 7.4% 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 15% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Marcus is expected to lag the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Marcus. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Marcus' revenues are expected to grow slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Marcus, and their negativity could be grounds for caution.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Marcus analysts - going out to 2022, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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