Conn's, Inc. (NASDAQ:CONN) Analysts Are Reducing Their Forecasts For This Year

The latest analyst coverage could presage a bad day for Conn's, Inc. (NASDAQ:CONN), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the consensus from Conn's' three analysts is for revenues of US$1.5b in 2023, which would reflect a discernible 6.7% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to crater 76% to US$0.69 in the same period. Previously, the analysts had been modelling revenues of US$1.6b and earnings per share (EPS) of US$1.61 in 2023. Indeed, we can see that the analysts are a lot more bearish about Conn's' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Conn's

The consensus price target fell 33% to US$15.00, with the weaker earnings outlook clearly leading analyst valuation estimates. 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 Conn's analyst has a price target of US$19.00 per share, while the most pessimistic values it at US$13.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Conn's shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 0.5% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 8.9% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.5% annually. So while a broad number of companies are forecast to grow, unfortunately Conn's is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Conn's' revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Conn's.

That said, the analysts might have good reason to be negative on Conn's, given its declining profit margins. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

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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.