Hannover Rück SE (ETR:HNR1) just released its latest first-quarter results and things are looking bullish. Hannover Rück beat revenue and statutory earnings per share (EPS) expectations, with sales hitting €7.0b (14% ahead of estimates) and EPS reaching €2.49 (a 5.1% beat). 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.
Taking into account the latest results, the current consensus from Hannover Rück's 14 analysts is for revenues of €24.4b in 2020, which would reflect a decent 10% increase on its sales over the past 12 months. Statutory earnings per share are forecast to dive 25% to €8.04 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of €23.9b and earnings per share (EPS) of €9.21 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
The consensus price target held steady at €139, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values Hannover Rück at €170 per share, while the most bearish prices it at €101. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hannover Rück shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Hannover Rück'sgrowth to accelerate, with the forecast 10% growth ranking favourably alongside historical growth of 7.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hannover Rück to grow faster than 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 Hannover Rück. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at €139, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Hannover Rück going out to 2023, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Hannover Rück you should be aware of.
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