Monarch Casino & Resort, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For Next Year

Monarch Casino & Resort, Inc. (NASDAQ:MCRI) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. Statutory revenue and earnings both blasted past expectations, with revenue of US$60m beating expectations by 25% and earnings per share (EPS) reaching US$0.57, some 199% ahead of expectations. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year. earnings-and-revenue-growthNasdaqGS:MCRI Earnings and Revenue Growth November 2nd 2020

After the latest results, the four analysts covering Monarch Casino & Resort are now predicting revenues of US$289.3m in 2021. If met, this would reflect a major 54% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 250% to US$2.82. In the lead-up to this report, the analysts had been modelling revenues of US$286.4m and earnings per share (EPS) of US$2.40 in 2021. Although the revenue estimates have not really changed, we can see there’s been a decent improvement in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There’s been no major changes to the consensus price target of US$54.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Monarch Casino & Resort, with the most bullish analyst valuing it at US$60.00 and the most bearish at US$50.00 per share. This is a very narrow spread of estimates, implying either that Monarch Casino & Resort is an easy company to value, or – more likely – the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Monarch Casino & Resort’s growth to accelerate, with the forecast 54% growth ranking favourably alongside historical growth of 2.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 22% next year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Monarch Casino & Resort is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Monarch Casino & Resort’s earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster 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 Monarch Casino & Resort analysts – going out to 2022, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Monarch Casino & Resort (1 is a bit unpleasant!) that you need to take into consideration.

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.

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