Shareholders will be ecstatic, with their stake up 21% over the past week following Hawkins, Inc.'s (NASDAQ:HWKN) latest annual results. Hawkins reported US$540m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.66 beat expectations, being 7.6% higher than what the analyst expected. The analyst typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Hawkins' lone analyst is for revenues of US$573.3m in 2021, which would reflect a credible 6.1% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 10% to US$2.96. In the lead-up to this report, the analyst had been modelling revenues of US$571.0m and earnings per share (EPS) of US$2.91 in 2021. So it's pretty clear that, although the analyst has updated their estimates, there's been no major change in expectations for the business following the latest results.
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. It's pretty clear that there is an expectation that Hawkins' revenue growth will slow down substantially, with revenues next year expected to grow 6.1%, compared to a historical growth rate of 8.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.7% next year. So it's pretty clear that, while Hawkins' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analyst holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We previously had no consensus price target, which could suggest the business has reached a point where the analyst feels comfortably deriving a valuation for it.
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. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You still need to take note of risks, for example - Hawkins has 2 warning signs (and 1 which is significant) we think you should know about.
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