It's been a mediocre week for Employers Holdings, Inc. (NYSE:EIG) shareholders, with the stock dropping 10% to US$27.87 in the week since its latest first-quarter results. It was a pretty bad result overall, with revenues coming in 31% lower than the analysts predicted. Statutory earnings correspondingly nosedived, with Employers Holdings reporting a loss of US$1.14 per share, where the analysts were expecting a profit. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the recent earnings report, the consensus from three analysts covering Employers Holdings is for revenues of US$596.9m in 2020, implying an uneasy 20% decline in sales compared to the last 12 months. Statutory earnings per share are expected to plunge 97% to US$0.07 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$671.0m and earnings per share (EPS) of US$2.73 in 2020. Indeed, we can see that the analysts are a lot more bearish about Employers Holdings' prospects following the latest results, administering a real cut to revenue estimates and slashing their EPS estimates to boot.
Despite the cuts to forecast earnings, there was no real change to the US$50.00 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 20%, a significant reduction from annual growth of 1.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Employers Holdings is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Employers Holdings. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 estimates - from multiple Employers Holdings analysts - going out to 2021, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Employers Holdings that you need to take into consideration.
If you spot an error that warrants correction, please contact the editor at email@example.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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.