Inspired Entertainment: Analysts Revise Forecasts Ahead of Earnings Call

Ladies and gentlemen, buckle up! We're diving headfirst into the world of inspired Entertainment, Inc. (NASDAQ:INSE), a company that's been making waves in the market. The earnings call is just around the corner, and the most accurate analysts have already revised their forecasts. Let's break it down and see what's in store for this gaming giant!

First things first, let's talk about the recent performance. Inspired Entertainment has been on a roll, with revenues soaring to US$60m in the latest third-quarter results. That's a 33% increase in shareholder stake over the past week alone! But the real kicker? They delivered a surprise statutory profit of US$0.01 per share, smashing analyst expectations of a loss. BOOM! Earnings crushed estimates!

Now, let's get to the meat of the matter. The analysts have updated their earnings model, and the consensus forecast for 2021 is for revenues of US$216.9m. That's a solid 12% improvement in sales compared to the last 12 months. But here's the twist: the loss per share is expected to narrow by 32% to US$1.66. Before this latest report, the consensus had been expecting revenues of US$231.1m and US$1.52 per share in losses. So, what does this mean? It means the analysts are more negative on Inspired Entertainment after the new consensus numbers; while they trimmed their revenue estimates, they also increased their per-share loss expectations.

But don't count Inspired Entertainment out just yet! The analysts lifted their price target 30% to US$10.00, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. That's right, folks! The most bullish analyst values Inspired Entertainment at US$11.00 per share, while the most bearish prices it at US$7.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.



Now, let's talk about the bigger picture. Inspired Entertainment's rate of growth is expected to accelerate meaningfully, with the forecast 12% revenue growth noticeably faster than its historical growth of 7.3% per annum over the past five years. But here's the catch: other companies in a similar industry are forecast to grow their revenue at 23% per year. That's right, folks! While the future growth outlook is brighter than the recent past, Inspired Entertainment is expected to grow slower than the wider industry.

So, what's the bottom line? The most important thing to take away is that the analysts increased their loss per share estimates for 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. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving. With that in mind, we wouldn't be too quick to come to a conclusion on Inspired Entertainment. Long-term earnings power is much more important than next year's profits.

So, what do you do now? Do you buy, sell, or hold? That's the million-dollar question. But one thing's for sure: Inspired Entertainment is a company to watch. The earnings call is just around the corner, and the analysts have already revised their forecasts. So, stay tuned, folks! This is one ride you won't want to miss!