Last week, you might have seen that Tilly’s, Inc. (NYSE:TLYS) released its full-year result to the market. The early response was not positive, with shares down 4.0% to US$5.10 in the past week. Tilly’s reported in line with analyst predictions, delivering revenues of US$619m and statutory earnings per share of US$0.76, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Tilly’s after the latest results.
Taking into account the latest results, the latest consensus from Tilly’s’s four analysts is for revenues of US$643.5m in 2021, which would reflect a reasonable 3.9% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast 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. So there’s definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.
The average analyst price target fell 28% to US$8.50, with reduced earnings forecasts clearly tied to a lower valuation estimate. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Tilly’s, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$6.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. Analysts are definitely expecting Tilly’s’s growth to accelerate, with the forecast 3.9% growth ranking favourably alongside historical growth of 3.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per 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. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Tilly’s going out to 2023, and you can see them free on our platform here.
We also provide an overview of the Tilly’s Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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