One thing we could say about the analysts on Zumiez Inc. (NASDAQ:ZUMZ) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the latest downgrade, the four analysts covering Zumiez provided consensus estimates of US$964m revenue in 2023, which would reflect a considerable 11% decline on its sales over the past 12 months. Statutory earnings per share are supposed to dive 63% to US$1.35 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.1b and earnings per share (EPS) of US$3.48 in 2023. Indeed, we can see that the analysts are a lot more bearish about Zumiez's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Zumiez

The consensus price target fell 32% to US$24.50, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Zumiez at US$25.00 per share, while the most bearish prices it at US$24.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 20% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 5.0% 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 6.4% annually for the foreseeable future. It's pretty clear that Zumiez's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Zumiez's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Zumiez's financials, such as its declining profit margins. For more information, you can click here to discover this and the 1 other flag we've identified.

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