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Aritzia Inc. (TSE:ATZ) Second-Quarter Results: Here's What Analysts Are Forecasting For This Year

Simply Wall St
·4 mins read

Aritzia Inc. (TSE:ATZ) just released its second-quarter report and things are looking bullish. Results overall were solid, with revenues arriving 6.4% better than analyst forecasts at CA$200m. Higher revenues also resulted in substantially lower statutory losses which, at CA$0.0078 per share, were 6.4% smaller than the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 Aritzia

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earnings-and-revenue-growth

Taking into account the latest results, Aritzia's nine analysts currently expect revenues in 2021 to be CA$848.0m, approximately in line with the last 12 months. Statutory earnings per share are forecast to descend 20% to CA$0.21 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$822.8m and earnings per share (EPS) of CA$0.08 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a massive increase in earnings per share in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of CA$24.94, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Aritzia, with the most bullish analyst valuing it at CA$26.00 and the most bearish at CA$23.50 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.7%, a significant reduction from annual growth of 9.6% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aritzia is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Aritzia's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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 forecasts for Aritzia going out to 2023, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Aritzia (of which 1 is significant!) you should know about.

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@simplywallst.com.