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Regis Corporation (NYSE:RGS) just released its latest third-quarter report and things are not looking great. Unfortunately, Regis delivered a serious earnings miss. Revenues of US$100m were 19% below expectations, and statutory losses ballooned 1,900% to US$0.30 per share. 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.
Following the recent earnings report, the consensus from two analysts covering Regis is for revenues of US$355.0m in 2022, implying a noticeable 5.6% decline in sales compared to the last 12 months. Earnings are expected to improve, with Regis forecast to report a statutory profit of US$0.39 per share. Before this earnings report, the analysts had been forecasting revenues of US$370.0m and earnings per share (EPS) of US$0.28 in 2022. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the great increase in to the earnings per share numbers.
The average price target increased 10% to US$11.00, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would also point out that the forecast 4.5% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 20% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 17% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Regis to suffer worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Regis' earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Regis (1 is a bit concerning!) that you need to be mindful of.
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. 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.
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