H2O Innovation Inc. (CVE:HEO) Third-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For Next Year
Investors in H2O Innovation Inc. (CVE:HEO) had a good week, as its shares rose 8.0% to close at CA$0.94 following the release of its third-quarter results. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for H2O Innovation
Taking into account the latest results, the most recent consensus for H2O Innovation from five analysts is for revenues of CA$140.4m in 2021 which, if met, would be a decent 8.4% increase on its sales over the past 12 months. Earnings are expected to improve, with H2O Innovation forecast to report a statutory profit of CA$0.009 per share. Before this earnings report, the analysts had been forecasting revenues of CA$145.5m and earnings per share (EPS) of CA$0.013 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a pretty serious reduction to earnings per share numbers.
The analysts made no major changes to their price target of CA$1.81, suggesting the downgrades are not expected to have a long-term impact on H2O Innovation'svaluation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on H2O Innovation, with the most bullish analyst valuing it at CA$2.00 and the most bearish at CA$1.30 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that H2O Innovation's revenue growth is expected to slow, with forecast 8.4% increase next year well below the historical 22%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that H2O Innovation is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at CA$1.81, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for H2O Innovation going out to 2024, and you can see them free on our platform here..
It is also worth noting that we have found 3 warning signs for H2O Innovation that you need to take into consideration.
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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