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Earnings Beat: Pebblebrook Hotel Trust Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Pebblebrook Hotel Trust (NYSE:PEB) came out with its annual results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. It looks like a credible result overall - although revenues of US$1.6b were what analysts expected, Pebblebrook Hotel Trust surprised by delivering a (statutory) profit of US$0.63 per share, an impressive 24% above what analysts had forecast. 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. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

View our latest analysis for Pebblebrook Hotel Trust

NYSE:PEB Past and Future Earnings, February 23rd 2020
NYSE:PEB Past and Future Earnings, February 23rd 2020

After the latest results, the consensus from Pebblebrook Hotel Trust's eleven analysts is for revenues of US$1.52b in 2020, which would reflect a perceptible 5.7% decline in sales compared to the last year of performance. Statutory earnings per share are expected to plummet 27% to US$0.46 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.52b and earnings per share (EPS) of US$0.28 in 2020. There was no real change to the revenue estimates, but analysts do seem more bullish on earnings, given the massive increase in earnings per share expectations following these results.

The consensus price target was unchanged at US$27.19, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Pebblebrook Hotel Trust, with the most bullish analyst valuing it at US$34.00 and the most bearish at US$22.50 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 5.7% a significant reduction from annual growth of 14% 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. It's pretty clear that Pebblebrook Hotel Trust's revenues are expected to perform substantially worse than the wider market.

The Bottom Line

The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Pebblebrook Hotel Trust's earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Pebblebrook Hotel Trust's revenues are expected to perform worse than the wider market. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Pebblebrook Hotel Trust going out to 2021, and you can see them free on our platform here.

You can also see whether Pebblebrook Hotel 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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