Yahoo Finance Earnings Update: Here's Why Analysts Just Lifted Their H & M Hennes & Mauritz AB (publ) Price Target To kr174
Shareholders of H & M Hennes & Mauritz AB (publ) (STO:HM B) will be pleased this week, given that the stock price is up 12% to kr212 following its latest annual results. H & M Hennes & Mauritz reported kr233b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of kr8.12 beat expectations, being 3.0% higher than what analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for H & M Hennes & Mauritz
After the latest results, the 21 analysts covering H & M Hennes & Mauritz are now predicting revenues of kr243.7b in 2020. If met, this would reflect a satisfactory 4.7% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 8.7% to kr8.83. In the lead-up to this report, analysts had been modelling revenues of kr244.2b and earnings per share (EPS) of kr8.52 in 2020. So the consensus seems to have become somewhat more optimistic on H & M Hennes & Mauritz's earnings potential following these results.
The consensus price target rose 5.9% to kr174, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic H & M Hennes & Mauritz analyst has a price target of kr239 per share, while the most pessimistic values it at kr90.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the H & M Hennes & Mauritz's past performance and to peers in the same market. We would highlight that H & M Hennes & Mauritz's revenue growth is expected to slow, with forecast 4.7% increase next year well below the historical 6.7%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 3.4% next year. So it's pretty clear that, while H & M Hennes & Mauritz's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around H & M Hennes & Mauritz's earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that H & M Hennes & Mauritz's revenues are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts 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. We have estimates - from multiple H & M Hennes & Mauritz analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether H & M Hennes & Mauritz is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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