Earnings Beat: Arhaus, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Shareholders of Arhaus, Inc. (NASDAQ:ARHS) will be pleased this week, given that the stock price is up 14% to US$14.90 following its latest yearly results. Arhaus reported US$1.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.89 beat expectations, being 6.8% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Arhaus
Following the latest results, Arhaus' nine analysts are now forecasting revenues of US$1.35b in 2024. This would be a satisfactory 5.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to drop 17% to US$0.74 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.33b and earnings per share (EPS) of US$0.74 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.
The analysts increased their price target 27% to US$17.15, perhaps signalling that higher revenues are a strong leading indicator for Arhaus's valuation. 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. The most optimistic Arhaus analyst has a price target of US$21.00 per share, while the most pessimistic values it at US$14.50. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Arhaus' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.1% growth on an annualised basis. This is compared to a historical growth rate of 31% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.2% annually. So it's pretty clear that, while Arhaus' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Arhaus analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Arhaus .
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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.
