Earnings Beat: Arhaus, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

As you might know, Arhaus, Inc. (NASDAQ:ARHS) just kicked off its latest quarterly results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$320m, some 8.7% above estimates, and statutory earnings per share (EPS) coming in at US$0.26, 68% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Arhaus after the latest results.

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Taking into account the latest results, the current consensus from Arhaus' six analysts is for revenues of US$1.34b in 2023, which would reflect a sizeable 21% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 62% to US$0.78. In the lead-up to this report, the analysts had been modelling revenues of US$1.37b and earnings per share (EPS) of US$0.78 in 2023. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

The consensus has reconfirmed its price target of US$11.71, showing that the analysts don't expect weaker sales expectations next year to have a material impact on Arhaus' market value. 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. The most optimistic Arhaus analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$10.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arhaus' past performance and to peers in the same industry. We would highlight that Arhaus' revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2023 being well below the historical 32% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.0% per year. Even after the forecast slowdown in growth, it seems obvious that Arhaus is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also downgraded their revenue estimates, although industry data suggests that Arhaus' revenues are expected to grow faster 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Arhaus going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Arhaus 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.