Yahoo Finance Travel + Leisure Co. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Investors in Travel + Leisure Co. (NYSE:TNL) had a good week, as its shares rose 5.1% to close at US$45.81 following the release of its quarterly results. The result was positive overall - although revenues of US$916m were in line with what the analysts predicted, Travel + Leisure surprised by delivering a statutory profit of US$0.92 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Travel + Leisure
Taking into account the latest results, the most recent consensus for Travel + Leisure from eight analysts is for revenues of US$3.91b in 2024. If met, it would imply a reasonable 3.3% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to reduce 2.7% to US$5.38 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.91b and earnings per share (EPS) of US$5.55 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$53.91, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Travel + Leisure, with the most bullish analyst valuing it at US$65.00 and the most bearish at US$40.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Travel + Leisure shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Travel + Leisure's rate of growth is expected to accelerate meaningfully, with the forecast 4.4% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 0.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 9.8% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Travel + Leisure is expected to grow slower than the wider industry.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$53.91, 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 Travel + Leisure. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Travel + Leisure analysts - going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Travel + Leisure (at least 1 which can't be ignored) , and understanding these should be part of your investment process.
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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.
