The analysts covering G-III Apparel Group, Ltd. (NASDAQ:GIII) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the latest downgrade, the current consensus, from the seven analysts covering G-III Apparel Group, is for revenues of US$2.7b in 2021, which would reflect a chunky 13% reduction in G-III Apparel Group’s sales over the past 12 months. Statutory earnings per share are anticipated to crater 62% to US$1.14 in the same period. Previously, the analysts had been modelling revenues of US$3.3b and earnings per share (EPS) of US$2.96 in 2021. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.
See our latest analysis for G-III Apparel Group
It’ll come as no surprise then, to learn that the analysts have cut their price target 42% to US$18.38. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values G-III Apparel Group at US$42.00 per share, while the most bearish prices it at US$8.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn’t rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the G-III Apparel Group’s past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 13% revenue decline a notable change from historical growth of 8.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – G-III Apparel Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that G-III Apparel Group’s revenues are expected to grow slower than the wider market. With a serious cut to this year’s expectations and a falling price target, we wouldn’t be surprised if investors were becoming wary of G-III Apparel Group.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for G-III Apparel Group going out to 2024, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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