Investors in Grove Collaborative Holdings, Inc. (NYSE:GROV) had a good week, as its shares rose 2.1% to close at US$1.97 following the release of its yearly results. The statutory results were mixed overall, with revenues of US$259m in line with analyst forecasts, but losses of US$1.28 per share, some 3.2% larger than the analysts were predicting. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the recent earnings report, the consensus from two analysts covering Grove Collaborative Holdings is for revenues of US$222.8m in 2024. This implies a considerable 14% decline in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 47% to US$0.61. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$253.3m and losses of US$0.27 per share in 2024. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target fell 7.7% to US$3.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
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. We would also point out that the forecast 14% annualised revenue decline to the end of 2024 is roughly in line with the historical trend, which saw revenues shrink 14% annually over the past three years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.2% annually. So while a broad number of companies are forecast to grow, unfortunately Grove Collaborative Holdings is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Grove Collaborative Holdings. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than 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.
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. We have analyst estimates for Grove Collaborative Holdings going out as far as 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Grove Collaborative Holdings , and understanding them should be part of your investment process.
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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.