There's been a notable change in appetite for Regional Management Corp. (NYSE:RM) shares in the week since its quarterly report, with the stock down 18% to US$27.54. Regional Management reported US$153m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.70 beat expectations, being 2.7% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
We've discovered 1 warning sign about Regional Management. View them for free.
Taking into account the latest results, the current consensus from Regional Management's six analysts is for revenues of US$638.6m in 2025. This would reflect a decent 11% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 33% to US$4.37. Before this earnings report, the analysts had been forecasting revenues of US$645.0m and earnings per share (EPS) of US$4.99 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
See our latest analysis for Regional Management
It might be a surprise to learn that the consensus price target was broadly unchanged at US$38.75, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. The most optimistic Regional Management analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$30.00. 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 Regional Management shareholders.
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. It's clear from the latest estimates that Regional Management's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Regional Management is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$38.75, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Regional Management going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Regional Management that you need to take into consideration.
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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.