Earnings Update: Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) Just Reported And Analysts Are Trimming Their Forecasts
As you might know, Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) last week released its latest second-quarter, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at US$63m, but statutory earnings fell catastrophically short, with a loss of US$0.28 some 69% larger than what the analysts had predicted. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Hydrofarm Holdings Group
Following the recent earnings report, the consensus from four analysts covering Hydrofarm Holdings Group is for revenues of US$247.3m in 2023. This implies a discernible 5.2% decline in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 55% to US$0.88. Before this latest report, the consensus had been expecting revenues of US$280.3m and US$0.74 per share in losses. 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 21% to US$1.18, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Hydrofarm Holdings Group analyst has a price target of US$2.00 per share, while the most pessimistic values it at US$1.10. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past three years, revenues have declined around 0.3% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 10% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.2% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Hydrofarm Holdings Group to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. 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.
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 Hydrofarm Holdings Group analysts - going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Hydrofarm Holdings Group has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
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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.
