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Arhaus, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

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Arhaus, Inc. (NASDAQ:ARHS) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$246m, some 4.8% above estimates, and statutory earnings per share (EPS) coming in at US$0.12, 50% 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Arhaus

earnings-and-revenue-growth
earnings-and-revenue-growth

After the latest results, the seven analysts covering Arhaus are now predicting revenues of US$1.17b in 2022. If met, this would reflect a major 34% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 151% to US$0.60. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.16b and earnings per share (EPS) of US$0.55 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target fell 11% to US$12.38, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Arhaus at US$15.00 per share, while the most bearish prices it at US$8.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arhaus' past performance and to peers in the same industry. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 48% growth on an annualised basis. That is in line with its 54% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.3% per year. So although Arhaus is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Arhaus following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Arhaus. Long-term earnings power is much more important than next year's profits. We have forecasts for Arhaus going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Arhaus you should be aware of.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.