Stock Analysis

Tilly's, Inc. Just Recorded A 1,650% EPS Beat: Here's What Analysts Are Forecasting Next

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NYSE:TLYS
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Tilly's, Inc. (NYSE:TLYS) just released its latest third-quarter results and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$140m, some 7.1% above estimates, and statutory earnings per share (EPS) coming in at US$0.07, 1,650% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Tilly's

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NYSE:TLYS Earnings and Revenue Growth December 6th 2020

After the latest results, the five analysts covering Tilly's are now predicting revenues of US$619.4m in 2022. If met, this would reflect a notable 18% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Tilly's forecast to report a statutory profit of US$0.65 per share. Before this earnings report, the analysts had been forecasting revenues of US$615.3m and earnings per share (EPS) of US$0.63 in 2022. So the consensus seems to have become somewhat more optimistic on Tilly's' earnings potential following these results.

The consensus price target rose 24% to US$10.50, 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. There are some variant perceptions on Tilly's, with the most bullish analyst valuing it at US$11.00 and the most bearish at US$10.00 per share. This is a very narrow spread of estimates, implying either that Tilly's is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 clear from the latest estimates that Tilly's' rate of growth is expected to accelerate meaningfully, with the forecast 18% revenue growth noticeably faster than its historical growth of 1.0%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.8% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Tilly's is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tilly's' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Tilly's analysts - going out to 2023, and you can see them free on our platform here.

Even so, be aware that Tilly's is showing 2 warning signs in our investment analysis , you should know about...

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What are the risks and opportunities for Tilly's?

Tilly’s, Inc. operates as a specialty retailer of casual apparel, footwear, accessories, and hardgoods for young men and women, and boys and girls in the United States.

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Rewards

  • Price-To-Earnings ratio (12.2x) is below the US market (15.5x)

  • Earnings are forecast to grow 16.67% per year

Risks

  • High level of non-cash earnings

  • Profit margins (3.1%) are lower than last year (8.1%)

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