Last week, you might have seen that Heritage Insurance Holdings, Inc. (NYSE:HRTG) released its full-year result to the market. The early response was not positive, with shares down 9.5% to US$11.16 in the past week. The results were positive, with revenue coming in at US$511m, beating analyst expectations by 2.3%. Following the result, 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've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the latest consensus from Heritage Insurance Holdings's three analysts is for revenues of US$536.1m in 2020, which would reflect a reasonable 4.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to soar 68% to US$1.65. In the lead-up to this report, analysts had been modelling revenues of US$523.0m and earnings per share (EPS) of US$2.06 in 2020. While next year's revenue estimates increased, there was also a substantial drop in EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The consensus price target was unchanged at US$17.33, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Heritage Insurance Holdings, with the most bullish analyst valuing it at US$21.00 and the most bearish at US$13.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
In addition, we can look to Heritage Insurance Holdings's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that Heritage Insurance Holdings's revenue growth is expected to slow, with forecast 4.8% increase next year well below the historical 9.0%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.1% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkHeritage Insurance Holdings will grow faster than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Heritage Insurance Holdings. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Heritage Insurance Holdings going out to 2021, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.