Analysts Just Made A Major Revision To Their Ten Entertainment Group plc (LON:TEG) Revenue Forecasts

Simply Wall St

The analysts covering Ten Entertainment Group plc (LON:TEG) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the consensus from five analysts covering Ten Entertainment Group is for revenues of UK£39m in 2020, implying a stressful 41% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing UK£44m of revenue in 2020. The consensus view seems to have become more pessimistic on Ten Entertainment Group, noting the measurable cut to revenue estimates in this update.

View our latest analysis for Ten Entertainment Group

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earnings-and-revenue-growth

We'd point out that there was no major changes to their price target of UK£2.64, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. Currently, the most bullish analyst values Ten Entertainment Group at UK£3.10 per share, while the most bearish prices it at UK£2.00. 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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 41%, a significant reduction from annual growth of 3.1% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% next year. It's pretty clear that Ten Entertainment Group's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Ten Entertainment Group going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Ten Entertainment Group's financials, such as dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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