Groupon, Inc. (NASDAQ:GRPN) Just Reported And Analysts Have Been Cutting Their Estimates

·4 min read

As you might know, Groupon, Inc. (NASDAQ:GRPN) last week released its latest annual, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at US$599m, but statutory earnings fell catastrophically short, with a loss of US$7.88 some 55% larger than what the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Groupon


Following the recent earnings report, the consensus from three analysts covering Groupon is for revenues of US$552.5m in 2023, implying a measurable 7.8% decline in sales compared to the last 12 months. Statutory losses are forecast to balloon 81% to US$1.46 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$638.4m and earnings per share (EPS) of US$0.53 in 2023. So we can see that the consensus has become notably more bearish on Groupon's outlook following these results, with a substantial drop in next year's revenue estimates. Furthermore, they expect the business to be loss-making next year, compared to their previous calls for a profit.

The consensus price target fell 7.8% to US$11.90, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Groupon analyst has a price target of US$27.00 per share, while the most pessimistic values it at US$4.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Groupon's past performance and to peers in the same industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2023 compared to the historical decline of 28% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.6% per year. So while a broad number of companies are forecast to grow, unfortunately Groupon is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Groupon dropped from profits to a loss next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Groupon's future valuation.

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 Groupon analysts - going out to 2025, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Groupon that you need to take into consideration.

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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.

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