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Last week, you might have seen that Ethan Allen Interiors Inc. (NYSE:ETH) released its quarterly result to the market. The early response was not positive, with shares down 2.5% to US$23.65 in the past week. It was a credible result overall, with revenues of US$179m and statutory earnings per share of US$0.67 both in line with analyst estimates, showing that Ethan Allen Interiors is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the twin analysts covering Ethan Allen Interiors are now predicting revenues of US$653.7m in 2021. If met, this would reflect a solid 14% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 180% to US$1.56. In the lead-up to this report, the analysts had been modelling revenues of US$653.7m and earnings per share (EPS) of US$1.56 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 26% to US$24.00. It looks as though they previously had some doubts over whether the business would live up to their expectations.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Ethan Allen Interiors' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 14%, well above its historical decline of 4.9% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 8.9% next year. So it looks like Ethan Allen Interiors is expected to grow faster than its competitors, at least for a while.
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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
You still need to take note of risks, for example - Ethan Allen Interiors has 4 warning signs we think you should be aware of.
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.
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