Whitbread plc Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Whitbread plc (LON:WTB) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Although revenues of UK£1.7b were in line with analyst expectations, Whitbread surprised on the earnings front, with an unexpected (statutory) profit of UK£0.21 per share a nice improvement on the losses that the analystsforecast. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Whitbread after the latest results.

See our latest analysis for Whitbread

Taking into account the latest results, the consensus forecast from Whitbread’s 20 analysts is for revenues of UK£2.29b in 2023, which would reflect a sizeable 34% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 341% to UK£0.93. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£2.24b and earnings per share (EPS) of UK£0.88 in 2023. It looks like there’s been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Despite these upgrades,the analysts have not made any major changes to their price target of UK£36.57, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Whitbread, with the most bullish analyst valuing it at UK£41.00 and the most bearish at UK£25.15 per share. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Whitbread is forecast to grow faster in the future than it has in the past, with revenues expected to display 34% annualised growth until the end of 2023. If achieved, this would be a much better result than the 20% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 12% per year. Not only are Whitbread’s revenues expected to improve, it seems that the analysts are also expecting it to grow faster 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 Whitbread’s earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at UK£36.57, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn’t be too quick to come to a conclusion on Whitbread. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Whitbread going out to 2025, and you can see them free on our platform here..

Don’t forget that there may still be risks. For instance, we’ve identified 1 warning sign for Whitbread that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.