Zumiez Inc. Just Beat EPS By 5.1%: Here's What Analysts Think Will Happen Next
One of the biggest stories of last week was how Zumiez Inc. (NASDAQ:ZUMZ) shares plunged 21% in the week since its latest full-year results, closing yesterday at US$19.17. Zumiez reported US$1.0b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.62 beat expectations, being 5.1% higher than what analysts expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Zumiez after the latest results.
View our latest analysis for Zumiez
Taking into account the latest results, the latest consensus from Zumiez's seven analysts is for revenues of US$1.07b in 2021, which would reflect a credible 3.1% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$2.68, roughly flat on the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.07b and earnings per share (EPS) of US$2.64 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 no major changes to earnings forecasts, the consensus price target fell 24% to US$27.29, suggesting that analysts might have previously been hoping for an earnings upgrade. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Zumiez analyst has a price target of US$39.00 per share, while the most pessimistic values it at US$20.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that analysts expect Zumiez's revenue growth will slow down substantially, with revenues next year expected to grow 3.1%, compared to a historical growth rate of 5.6% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Zumiez.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Zumiez going out to 2023, and you can see them free on our platform here..
We also provide an overview of the Zumiez Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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.
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