Earnings Update: Duluth Holdings Inc. (NASDAQ:DLTH) Just Reported And Analysts Are Trimming Their Forecasts

There's been a notable change in appetite for Duluth Holdings Inc. (NASDAQ:DLTH) shares in the week since its annual report, with the stock down 15% to US$4.81. Results were roughly in line with estimates, with revenues of US$616m and statutory earnings per share of US$0.59. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Duluth Holdings

Taking into account the latest results, the current consensus, from the four analysts covering Duluth Holdings, is for revenues of US$595.5m in 2021, which would reflect a small 3.3% reduction in Duluth Holdings's sales over the past 12 months. Statutory earnings per share are forecast to nosedive 69% to US$0.18 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$666.7m and earnings per share (EPS) of US$0.56 in 2021. Indeed, we can see that the analysts are a lot more bearish about Duluth Holdings's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

It'll come as no surprise then, to learn thatthe analysts have cut their price target 58% to US$4.67. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Duluth Holdings analyst has a price target of US$5.00 per share, while the most pessimistic values it at US$4.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 3.3% revenue decline a notable change from historical growth of 20% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 16% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Duluth Holdings is expected to lag the wider 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Duluth Holdings's future valuation.

Following on from that line of thought, we think that 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 Duluth Holdings going out to 2022, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Duluth Holdings (1 is potentially serious!) that you should be aware of.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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