The Container Store Group, Inc. (NYSE:TCS) Analysts Just Trimmed Their Revenue Forecasts By 16%
Today is shaping up negative for The Container Store Group, Inc. (NYSE:TCS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the consensus from four analysts covering Container Store Group is for revenues of US$896m in 2024, implying a considerable 14% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$1.1b in 2024. The consensus view seems to have become more pessimistic on Container Store Group, noting the substantial drop in revenue estimates in this update.
See our latest analysis for Container Store Group
Notably, the analysts have cut their price target 42% to US$3.50, suggesting concerns around Container Store Group's valuation. 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 Container Store Group at US$5.00 per share, while the most bearish prices it at US$2.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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 annualised revenue decline of 14% by the end of 2024. This indicates a significant reduction from annual growth of 5.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.2% annually for the foreseeable future. It's pretty clear that Container Store Group's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Container Store Group going forwards.
Unfortunately, the earnings downgrade - if accurate - may also place pressure on Container Store Group's mountain of debt, which could lead to some belt tightening for shareholders. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.
You can also see our analysis of Container Store Group's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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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.
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