Fashion retailer Revolve Group (NYSE:RVLV) posted a solid earnings report recently, and investors were happy to see it. In fact, they pushed the share price up substantially in Friday afternoon’s trading. Yet, even as current investments are coming in, there are signs of trouble afoot in the background.
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The good news for Revolve was that it beat earnings projections; while consensus expectations looked for $0.10 per share, Revolve posted $0.11 per share. It also offered a beat on revenue, bringing in $259.15 million, which was more than enough to take out expectations of $240.41 million. Revolve’s roster of active customers was up 91,000 in the fourth quarter, raising its total customer base to 2.34 million. Inventory positions are also starting to level off, which should mean improved margins going forward.
The bad news, however, is the opposition to that stance. Kolomeets Investments noted Revolve didn’t have much in the way of overall growth potential. In fact, Kolomeets suggested that earlier gains in growth rates and profit were actually baked into share prices all along. Therefore, it only has so much future potential for growth. Worse, most of Revolve’s revenue comes from high-end clients. Macroeconomic issues may particularly hurt Revolve going forward.
Analysts, meanwhile, are somewhat split on Revolve’s chances. With three analysts recommending a Buy and two recommending a Hold, Revolve stock is considered a Moderate Buy with 15.58% upside potential thanks to its average price target of $29.60.
