Regis Corporation (NYSE:RGS) Analysts Just Trimmed Their Revenue Forecasts By 12%

Market forces rained on the parade of Regis Corporation (NYSE:RGS) shareholders today, when the analysts downgraded their forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from twin analysts covering Regis is for revenues of US$314m in 2022, implying a considerable 17% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$355m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on Regis, given the substantial drop in revenue estimates.

View our latest analysis for Regis

We'd point out that there was no major changes to their price target of US$10.75, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Regis at US$12.00 per share, while the most bearish prices it at US$9.50. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

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. We would also point out that the forecast 14% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 20% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 17% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Regis to suffer worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Regis next year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Regis going forwards.

That said, the analysts might have good reason to be negative on Regis, given a short cash runway. For more information, you can click here to discover this and the 1 other concern we've identified.

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.

If you’re looking to trade Regis, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.