Brilliant Earth Group (BRLT) AI Stock Analysis

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Brilliant Earth Group

(NASDAQ:BRLT)

54Neutral

Brilliant Earth Group's overall stock score reflects a mixed performance. Strong revenue growth and operational cash strength are positive, but inconsistent profitability and high leverage are concerns. Technical indicators suggest a neutral-to-negative trend, and valuation metrics indicate potential overvaluation relative to earnings. These factors collectively contribute to the current score.

Positive Factors

Earnings

Positive stock reaction as 3Q EPS of 2c beat Street's 0c on better margins with adj. EBITDA of $3.6m vs. Street's $1.8mm.

Engagement Ring Sales

Engagement Ring Unit Momentum is an Encouraging Sign. BRLT's unit comp for engagement rings was strongest in 4Q, and, specifically within the showroom channel, engagement ring unit comped positively.

Financial Performance

Positive stock reaction to a solid 4Q as BRLT enjoyed strong holiday sales trends inclusive of steady sequential revenue booking improvements throughout the quarter and record Black Friday bookings.

Negative Factors

Average Sale Price

Average sale price for engagement rings declined Y/Y in 4Q as BRLT noted outsized consumer demand at price points <$5k.

Bridal Industry Trends

Bridal industry trends remain pressured on a multi-year normalization path.

Macroeconomic Factors

The broader macro backdrop, including weakness in lab diamond pricing in recent years, is seen as the largest risk to shares.

Brilliant Earth Group (BRLT) vs. S&P 500 (SPY)

Market Cap

$141.13M

Dividend YieldN/A

Average Volume (3M)68.06K

Price to Earnings (P/E)―

Beta (1Y)1.29

Revenue Growth-5.43%

EPS Growth-15.13%

CountryUS

Employees756

SectorConsumer Cyclical

Sector Strength63

IndustryLuxury Goods

Share Statistics

EPS (TTM)-0.03

Shares Outstanding14,433,900

10 Day Avg. Volume48,572

30 Day Avg. Volume68,056

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.35

Price to Cash Flow (P/CF)2.60

P/FCF Ratio2.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$1.87

Price Target Upside31.69% Upside

Rating ConsensusHold

Number of Analyst Covering5

Brilliant Earth Group Business Overview & Revenue Model

Company DescriptionBrilliant Earth Group, Inc. engages in the design, procurement, and retail sale of diamonds, gemstones, and jewelry in the United States and internationally. Its product assortment and merchandise include a collection of diamond engagement rings, wedding and anniversary rings, gemstone rings, and fine jewelry. The company sells directly to consumers through its omnichannel sales platform, including e-commerce and showrooms. As of December 31, 2021, it had 15 showrooms. The company was founded in 2005 and is headquartered in San Francisco, California.

How the Company Makes MoneyBrilliant Earth Group makes money primarily through the sale of fine jewelry, including engagement rings, wedding bands, and other jewelry products. The company's revenue model is centered around direct-to-consumer sales both through its e-commerce platform and physical showrooms. Key revenue streams include the sale of custom-designed jewelry and ready-made pieces, leveraging their strong brand reputation for ethical sourcing and sustainability. Partnerships with suppliers of ethically sourced diamonds and recycled metals also contribute to their value proposition, enhancing their product offerings and market appeal. Additionally, Brilliant Earth may engage in strategic marketing alliances and collaborations to boost their reach and sales.

Brilliant Earth Group Financial Statement Overview

Summary

Brilliant Earth Group shows strong revenue growth and gross profit margins, indicating potential in market positioning. However, inconsistent profitability and high leverage pose risks. The cash flow management improvements reflect effective operations, but the need for consistency in profitability and reduced leverage remains crucial.

Income Statement

Positive

Brilliant Earth Group shows a positive trend in revenue growth over the years, with a noticeable revenue increase from 2020 to 2024. Gross profit margins are strong, suggesting efficient cost management. However, the net profit margin is inconsistent, fluctuating over the years, indicating challenges in managing operating expenses and other costs. EBIT and EBITDA margins have been volatile, reflecting operational inefficiencies that need addressing to stabilize profitability.

Balance Sheet

Neutral

The company's equity position has improved from negative in earlier years to positive in recent periods, showcasing a strengthening financial base. However, the debt-to-equity ratio remains high, highlighting reliance on debt funding. The equity ratio remains low, indicating a potential risk if business conditions deteriorate. ROE has vastly improved, but remains inconsistent, suggesting the company is still stabilizing its returns on equity.

Cash Flow

Positive

Brilliant Earth Group's cash flow statements indicate strong free cash flow growth from 2020 to 2024, signifying effective cash management and operational improvements. The operating cash flow to net income ratio is favorable, indicating good cash conversion. However, the free cash flow to net income ratio is inconsistent, suggesting fluctuations in capital expenditure or cash operational efficiencies that need addressing.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
422.16M	446.38M	439.88M	380.19M	251.82M
	Gross Profit
254.40M	257.00M	234.29M	187.42M	112.30M
	EBIT
3.35M	4.48M	23.33M	40.13M	26.59M
	EBITDA
14.50M	13.63M	28.67M	40.99M	27.16M
	Net Income Common Stockholders
541.00K	584.00K	19.02M	1.53M	21.58M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
161.93M	155.81M	154.65M	172.87M	66.27M
	Total Assets
281.25M	273.58M	262.57M	217.73M	85.22M
	Total Debt
47.65M	100.20M	95.12M	63.58M	62.21M
	Net Debt
-114.27M	-55.61M	-59.53M	-109.29M	-4.06M
	Total Liabilities
171.86M	176.13M	169.43M	134.89M	170.61M
	Stockholders Equity
15.33M	12.53M	10.93M	8.40M	-85.39M
Cash Flow		Free Cash Flow
12.69M	14.27M	5.38M	40.47M	26.14M
	Operating Cash Flow
17.59M	26.21M	14.51M	46.08M	26.72M
	Investing Cash Flow
-4.91M	-11.94M	-9.12M	-5.61M	-584.00K
	Financing Cash Flow
-6.57M	-13.10M	-23.60M	66.12M	-263.00K

Brilliant Earth Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.42

Price Trends

50DMA

1.49

Negative

100DMA

1.71

Negative

200DMA

1.87

Negative

Market Momentum

MACD

0.02

Negative

RSI

54.80

Neutral

STOCH

53.34

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BRLT, the sentiment is Negative. The current price of 1.42 is below the 20-day moving average (MA) of 1.50, below the 50-day MA of 1.49, and below the 200-day MA of 1.87, indicating a bearish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 54.80 is Neutral, neither overbought nor oversold. The STOCH value of 53.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BRLT.

Brilliant Earth Group Risk Analysis

Brilliant Earth Group disclosed 64 risk factors in its most recent earnings report. Brilliant Earth Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Brilliant Earth Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	59 Neutral	$11.46B	10.32	-0.28%	4.02%	1.19%	-15.86%
BRLT	54 Neutral	$141.13M	―	3.88%	―	-5.43%	-15.13%
LESL	47 Neutral	$110.19M	―	12.90%	―	-6.90%	-256.95%
VRA	42 Neutral	$58.31M	―	-28.34%	―	-20.99%	-976.24%
RENT	41 Neutral	$20.42M	―	47.49%	―	2.62%	35.21%
DTC	40 Underperform	$14.76M	―	-60.46%	―	-8.13%	0.04%
LVLU	39 Underperform	$19.04M	―	-148.78%	―	-11.06%	-175.45%

* Consumer Cyclical Sector Average

Performance Comparison

BRLT

Brilliant Earth Group

1.42

-1.29

-47.60%

VRA

Vera Bradley

2.10

-4.27

-67.03%

LESL

Leslie's

0.59

-3.79

-86.53%

RENT

Rent the Runway

5.26

-9.46

-64.27%

DTC

Solo Brands Inc Class A

0.16

-1.66

-91.21%

LVLU

Lulu's Fashion Lounge Holdings

0.44

-0.88

-66.67%

Brilliant Earth Group Earnings Call Summary

Earnings Call Date: Mar 12, 2025 | % Change Since: 5.97% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

Brilliant Earth demonstrated strong profitability and operational cash strength, with significant growth in repeat orders and fine jewelry. However, these positives were tempered by declines in net sales and engagement ring ASPs amid a challenging macroeconomic environment.

Highlights

Strong Profitability

Brilliant Earth achieved its 14th consecutive quarter of profitability with Q4 net sales of $119.5 million, at the high-end of expectations, and adjusted EBITDA of $6.9 million, surpassing guidance.

Repeat Order Growth

Repeat orders grew by 18% year-over-year in Q4 and 17% for the full year, indicating strong brand resonance and customer loyalty.

Gross Margin Expansion

Gross margin expanded by 90 basis points year-over-year in Q4 and by 270 basis points for the full year, reflecting premium brand positioning and pricing strategies.

Fine Jewelry Success

Double-digit bookings growth in fine jewelry during Q4, with December fine jewelry contributing a record-breaking 27% of total bookings.

Operational Cash Strength

Ended the year with approximately $162 million in cash and a net cash position of $106 million, the highest since Q4 2021.

Lowlights

Decline in Net Sales

Q4 net sales declined by 4% year-over-year, and full-year net sales were down by 5% from the previous year.

Engagement Ring ASP Decline

Average selling price for engagement rings decreased, with stronger performance in price ranges under $5,000.

Dynamic Macro Environment

Ongoing challenges in the macroeconomic environment, including pricing shifts in diamonds and changing consumer sentiment.

Company Guidance

In the Brilliant Earth's Fourth Quarter 2024 earnings call, the company reported net sales of $119.5 million, aligned with the high-end of their guidance range, but reflecting a 4% year-over-year decline. For the full fiscal year, net sales dropped 5% to $422.2 million. Despite the decline in sales, profitability significantly exceeded expectations, marking the company's 14th consecutive quarter of profitability as a public entity. Key performance indicators highlighted include a 10% year-over-year growth in total orders for Q4 and a 7% increase for the full year. Notably, repeat orders grew by 18% in Q4 and 17% for the year. The gross margin improved by 90 basis points year-over-year in Q4 and 270 basis points for the year. Marketing expenses as a percentage of net sales were reduced by 340 basis points in Q4, a full year ahead of schedule. Adjusted EBITDA for Q4 was $6.9 million, with a 5.8% margin, and $21.1 million for the full year, translating to a 5% margin. Looking ahead to 2025, the company anticipates slight year-over-year sales growth, with Q1 sales projected to be slightly down compared to the previous year. The strategic focus remains on long-term growth through omnichannel experiences, product innovation, and expanding their showroom footprint.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.