AU$2.15 - That's What Analysts Think Adairs Limited (ASX:ADH) Is Worth After These Results

Shareholders will be ecstatic, with their stake up 21% over the past week following Adairs Limited's (ASX:ADH) latest half-yearly results. It was a credible result overall, with revenues of AU$302m and statutory earnings per share of AU$0.22 both in line with analyst estimates, showing that Adairs is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Adairs

Following last week's earnings report, Adairs' eight analysts are forecasting 2024 revenues to be AU$589.7m, approximately in line with the last 12 months. Statutory per share are forecast to be AU$0.19, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of AU$583.3m and earnings per share (EPS) of AU$0.15 in 2024. Although the revenue estimates have not really changed, we can see there's been a sizeable expansion in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target rose 41% to AU$2.15, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Adairs at AU$2.40 per share, while the most bearish prices it at AU$2.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 3.2% annualised decline to the end of 2024. That is a notable change from historical growth of 14% 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 7.1% annually for the foreseeable future. It's pretty clear that Adairs' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Adairs following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Adairs' revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Adairs going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Adairs that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.