Yahoo Finance RLJ Lodging Trust Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
It's been a sad week for RLJ Lodging Trust (NYSE:RLJ), who've watched their investment drop 12% to US$14.13 in the week since the company reported its annual result. RLJ Lodging Trust reported US$1.6b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.59 beat expectations, being 8.3% higher than what analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
View our latest analysis for RLJ Lodging Trust
Taking into account the latest results, the current consensus, from the nine analysts covering RLJ Lodging Trust, is for revenues of US$1.44b in 2020, which would reflect an uncomfortable 8.3% reduction in RLJ Lodging Trust's sales over the past 12 months. Statutory earnings per share are forecast to dive 24% to US$0.45 in the same period. Before this earnings report, analysts had been forecasting revenues of US$1.43b and earnings per share (EPS) of US$0.47 in 2020. 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 analysts did make a small dip in their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$18.09, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 RLJ Lodging Trust analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$15.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that sales are expected to reverse, with the forecast 8.3% revenue decline a notable change from historical growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.9% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect RLJ Lodging Trust to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that RLJ Lodging Trust's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$18.09, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple RLJ Lodging Trust analysts - going out to 2021, and you can see them free on our platform here.
You can also see whether RLJ Lodging Trust is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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