Hercules Capital, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year
It's been a good week for Hercules Capital, Inc. (NYSE:HTGC) shareholders, because the company has just released its latest annual results, and the shares gained 7.6% to US$18.60. Revenues were US$461m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.31 were also better than expected, beating analyst predictions by 15%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Hercules Capital
Taking into account the latest results, the current consensus from Hercules Capital's eight analysts is for revenues of US$501.0m in 2024. This would reflect a decent 8.8% increase on its revenue over the past 12 months. Statutory earnings per share are expected to reduce 5.7% to US$2.01 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$487.3m and earnings per share (EPS) of US$2.00 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.
It may not be a surprise to see thatthe analysts have reconfirmed their price target of US$18.28, implying that the uplift in revenue is not expected to greatly contribute to Hercules Capital's valuation in the near term. 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 Hercules Capital at US$21.00 per share, while the most bearish prices it at US$16.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Hercules Capital's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.8% growth on an annualised basis. This is compared to a historical growth rate of 12% 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 6.6% annually. So it's pretty clear that, while Hercules Capital's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$18.28, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Hercules Capital. Long-term earnings power is much more important than next year's profits. We have forecasts for Hercules Capital going out to 2025, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 4 warning signs for Hercules Capital (2 are potentially serious!) that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
