There's been a notable change in appetite for Revolve Group, Inc. (NYSE:RVLV) shares in the week since its quarterly report, with the stock down 10% to US$17.43. Revenues were US$297m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.16 were also better than expected, beating analyst predictions by 15%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Revolve Group's 15 analysts is for revenues of US$1.19b in 2025. This would reflect an okay 3.2% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to nosedive 41% to US$0.41 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.22b and earnings per share (EPS) of US$0.70 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
View our latest analysis for Revolve Group
It'll come as no surprise then, to learn that the analysts have cut their price target 21% to US$21.73. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Revolve Group at US$30.00 per share, while the most bearish prices it at US$17.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. We would highlight that Revolve Group's revenue growth is expected to slow, with the forecast 4.3% annualised growth rate until the end of 2025 being well below the historical 14% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.9% annually. So it's pretty clear that, while Revolve Group's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Revolve Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Revolve Group going out to 2027, and you can see them free on our platform here.
Even so, be aware that Revolve Group is showing 1 warning sign in our investment analysis , you should know about...
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