Global Urbanization And Digital Manufacturing Will Spark Rebound

Key Takeaways

• Refocused portfolio and investments in automation, digital services, and R&D are expected to boost margins and drive stable, long-term earnings growth.
  
• Strong global demand trends and supply chain optimization position Hillenbrand to rebound with higher revenue and greater resilience amid macro uncertainties.
  
• Ongoing macroeconomic, integration, and financial pressures threaten margins, stability, and competitiveness unless Hillenbrand accelerates operational execution, modernization, and cost management.

Catalysts

Operates as an industrial company in the United States and internationally.

• Recent stabilization and uptick in customer quoting, test facility activity, and order wins following prolonged project delays suggest that demand is merely postponed due to macro and tariff uncertainty-not lost-positioning Hillenbrand for a rebound in revenue as order activity resumes.
  
• Ongoing global urbanization and middle-class growth, especially in Asia and emerging markets, are driving greater downstream demand in key end markets (food, plastics, consumer products), supporting a sustained long-term revenue expansion and increased backlog.
  
• Portfolio optimization and recent divestitures have concentrated Hillenbrand's focus on higher-margin, higher-growth segments (Performance Materials, Food, Health & Nutrition), expected to improve EBITDA margins and enhance earnings stability as lower-margin businesses are exited.
  
• Accelerating industry demand for factory automation and digital manufacturing solutions aligns with Hillenbrand's increased investment in R&D and digital service offerings (automation, remote monitoring, predictive maintenance), supporting growth in recurring, higher-margin aftermarket and service revenue streams.
  
• Enhanced global manufacturing footprint and in-region, for-region supply chain initiatives are mitigating tariff risks, lowering operating costs, and enabling Hillenbrand to better capture growth opportunities in international markets-positioning the company for top-line growth and improved net margin resilience.

Hillenbrand Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Hillenbrand's revenue will decrease by 6.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -0.7% today to 9.7% in 3 years time.
• Analysts expect earnings to reach $225.8 million (and earnings per share of $3.62) by about August 2028, up from $-20.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.0x on those 2028 earnings, up from -87.9x today. This future PE is lower than the current PE for the US Machinery industry at 24.5x.
• Analysts expect the number of shares outstanding to grow by 0.36% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.4%, as per the Simply Wall St company report.

Hillenbrand Future Earnings Per Share Growth

Risks

• Ongoing global macroeconomic uncertainty, customer caution, and delayed investment decisions-particularly due to tariff and trade policy risks-have caused lower order volumes and backlogs in Hillenbrand's key capital equipment segments, which threatens longer-term revenue growth and earnings stability if prolonged.
  
• Integration risk and operational execution challenges remain following recent M&A activity and ongoing portfolio transformation, as evidenced by ongoing cost synergy efforts and the need for further commercial integration, which could negatively impact margins and net earnings if not executed efficiently.
  
• Hillenbrand's exposure to competitive, price-sensitive markets (notably in China and Europe for MTS, and plastics for APS) is pressuring pricing and margin recovery efforts, especially as the company is still trailing on price-cost coverage despite some recent improvements-posing sustained risk to gross and EBITDA margins.
  
• High net leverage (3.7x EBITDA post-divestitures) limits financial flexibility, and weak cash conversion due to delayed customer orders and project timing further exacerbates risk to dividend sustainability, debt paydown, and shareholder returns.
  
• The secular trend toward digital manufacturing, automation, and potentially evolving business models (e.g., equipment-as-a-service) may outpace Hillenbrand's current technology and service adoption; failure to accelerate R&D investment and product/service modernization could erode market share and suppress long-term revenue and earnings growth.

Valuation

• The analysts have a consensus price target of $33.0 for Hillenbrand based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $40.0, and the most bearish reporting a price target of just $24.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.3 billion, earnings will come to $225.8 million, and it would be trading on a PE ratio of 14.0x, assuming you use a discount rate of 10.4%.
  
• Given the current share price of $25.58, the analyst price target of $33.0 is 22.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.