Earnings Miss: Lemon Tree Hotels Limited Missed EPS By 17% And Analysts Are Revising Their Forecasts
Lemon Tree Hotels Limited (NSE:LEMONTREE) shareholders are probably feeling a little disappointed, since its shares fell 3.5% to ₹109 in the week after its latest quarterly results. It was not a great result overall. While revenues of ₹3.4b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 17% to hit ₹0.58 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Lemon Tree Hotels from 20 analysts is for revenues of ₹16.0b in 2027. If met, it would imply a notable 8.2% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to soar 30% to ₹3.84. Before this earnings report, the analysts had been forecasting revenues of ₹16.3b and earnings per share (EPS) of ₹4.07 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
View our latest analysis for Lemon Tree Hotels
The consensus price target held steady at ₹152, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Lemon Tree Hotels, with the most bullish analyst valuing it at ₹192 and the most bearish at ₹120 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Lemon Tree Hotels' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it seems obvious that Lemon Tree Hotels is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Lemon Tree Hotels' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lemon Tree Hotels analysts - going out to 2029, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Lemon Tree Hotels 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.