It’s been a pretty great week for G-III Apparel Group, Ltd. (NASDAQ:GIII) shareholders, with its shares surging 18% to US$14.10 in the week since its latest quarterly results. Results look to have been somewhat negative – revenue fell 9.3% short of analyst estimates at US$297m, although statutory losses were somewhat better. The per-share loss was US$0.31, 74% smaller than the analysts were expecting prior to the result. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the eight analysts covering G-III Apparel Group provided consensus estimates of US$2.02b revenue in 2021, which would reflect a substantial 22% decline on its sales over the past 12 months. Statutory earnings per share are forecast to tumble 96% to US$0.062 in the same period. Before this earnings announcement, the analysts had been modelling revenues of US$2.16b and losses of US$1.08 per share in 2021. While we note the small dip in to the revenue outlook, the analysts are now also predicting for the business to become profitable next year – sooner than previously forecast – which looks like a pretty clear lift in expectations.
There’s been no real change to the average price target of US$18.40, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company’s valuation over a longer timeframe. 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. The most optimistic G-III Apparel Group analyst has a price target of US$24.00 per share, while the most pessimistic values it at US$8.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for 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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 22%, a significant reduction from annual growth of 6.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.7% next year. It’s pretty clear that G-III Apparel Group’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there’s been a clear step-change in belief around the business’ prospects, with the analysts now expecting G-III Apparel Group to become profitable next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on G-III Apparel Group. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for G-III Apparel Group going out to 2023, and you can see them free on our platform here..
Even so, be aware that G-III Apparel Group is showing 4 warning signs in our investment analysis , and 1 of those is a bit concerning…
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