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US$8.50: That's What Analysts Think Tilly's, Inc. Is Worth After Its Latest Results

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Last week, you might have seen that Tilly's, Inc. (NYSE:TLYS) released its yearly result to the market. The early response was not positive, with shares down 4.0% to US$5.10 in the past week. It was a credible result overall, with revenues of US$619m and statutory earnings per share of US$0.76 both in line with analyst estimates, showing that Tilly's is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

View our latest analysis for Tilly's

NYSE:TLYS Past and Future Earnings, March 16th 2020
NYSE:TLYS Past and Future Earnings, March 16th 2020

Taking into account the latest results, the most recent consensus for Tilly's from four analysts is for revenues of US$643.5m in 2021, which is an okay 3.9% increase on its sales over the past 12 months. Statutory earnings per share are expected to decline 13% to US$0.67 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$655.6m and earnings per share (EPS) of US$0.82 in 2021. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

It might be a surprise to learn that the consensus price target fell 28% to US$8.50, with analysts clearly linking lower forecast earnings to the performance of the stock price. 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. Currently, the most bullish analyst values Tilly's at US$10.00 per share, while the most bearish prices it at US$6.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Tilly's shareholders.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Tilly's's performance in recent years. It's clear from the latest estimates that Tilly's's rate of growth is expected to accelerate meaningfully, with forecast 3.9% revenue growth noticeably faster than its historical growth of 3.2%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 5.2% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect Tilly's to grow slower than the wider market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tilly's. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Tilly's's revenues are expected to perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Tilly's's future valuation.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Tilly's going out to 2023, and you can see them free on our platform here..

You can also see our analysis of Tilly's's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.