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Héroux-Devtek Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models

Simply Wall St

It's been a good week for Héroux-Devtek Inc. (TSE:HRX) shareholders, because the company has just released its latest third-quarter results, and the shares gained 7.9% to CA$21.46. It was a pretty mixed result, with revenues beating expectations to hit CA$157m. Statutory earnings fell 6.5% short of analyst forecasts, reaching CA$0.24 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Héroux-Devtek

TSX:HRX Past and Future Earnings, February 9th 2020

Taking into account the latest results, the most recent consensus for Héroux-Devtek from seven analysts is for revenues of CA$642.5m in 2021, which is an okay 6.4% increase on its sales over the past 12 months. Statutory earnings per share are expected to bounce 23% to CA$1.15. Yet prior to the latest earnings, analysts had been forecasting revenues of CA$637.7m and earnings per share (EPS) of CA$1.16 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

Analysts reconfirmed their price target of CA$24.14, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Héroux-Devtek, with the most bullish analyst valuing it at CA$25.00 and the most bearish at CA$22.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect Héroux-Devtek's revenue growth will slow down substantially, with revenues next year expected to grow 6.4%, compared to a historical growth rate of 8.1% over the past five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.6% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Héroux-Devtek to grow at about the same rate as the wider market.

The Bottom Line

The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. 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.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Héroux-Devtek analysts - going out to 2022, and you can see them free on our platform here.

You can also see whether Héroux-Devtek 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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