The Consensus EPS Estimates For Brilliant Earth Group, Inc. (NASDAQ:BRLT) Just Fell Dramatically

One thing we could say about the analysts on Brilliant Earth Group, Inc. (NASDAQ:BRLT) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After the downgrade, the nine analysts covering Brilliant Earth Group are now predicting revenues of US$525m in 2023. If met, this would reflect a meaningful 19% improvement in sales compared to the last 12 months. Statutory earnings per share are supposed to decrease 9.0% to US$0.24 in the same period. Prior to this update, the analysts had been forecasting revenues of US$590m and earnings per share (EPS) of US$0.34 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

Our analysis indicates that BRLT is potentially undervalued!

Analysts made no major changes to their price target of US$10.63, suggesting the downgrades are not expected to have a long-term impact on Brilliant Earth Group's valuation. 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. There are some variant perceptions on Brilliant Earth Group, with the most bullish analyst valuing it at US$16.00 and the most bearish at US$8.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Brilliant Earth Group's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 28% over the past 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. So it's pretty clear that, while Brilliant Earth Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Brilliant Earth Group. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Brilliant Earth Group after the downgrade.

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 Brilliant Earth 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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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.