One of the biggest stories of last week was how H+H International A/S (CPH:HH) shares plunged 29% in the week since its latest annual results, closing yesterday at ø86.75. It was an okay result overall, with revenues coming in at ø2.8b, roughly what analysts had been expecting. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, H+H International's twin analysts currently expect revenues in 2020 to be ø2.88b, approximately in line with the last 12 months. Statutory earnings per share are expected to jump 65% to ø13.70. Before this earnings report, analysts had been forecasting revenues of ø2.86b and earnings per share (EPS) of ø14.60 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at ø150, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation.
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. We would highlight that H+H International's revenue growth is expected to slow, with forecast 1.4% increase next year well below the historical 15%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 3.5% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than H+H International.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that H+H International's revenues are expected to perform worse than the wider market. The consensus price target held steady at ø150, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on H+H International. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
It might also be worth considering whether H+H International's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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