hGears AG (ETR:HGEA) Just Reported, And Analysts Assigned A €8.67 Price Target

Last week, you might have seen that hGears AG (ETR:HGEA) released its annual result to the market. The early response was not positive, with shares down 4.7% to €5.64 in the past week. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 3.4%to hit €139m. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for hGears

After the latest results, the consensus from hGears' three analysts is for revenues of €136.6m in 2023, which would reflect a small 2.1% decline in sales compared to the last year of performance. Earnings are expected to improve, with hGears forecast to report a statutory profit of €0.18 per share. Before this earnings report, the analysts had been forecasting revenues of €136.5m and earnings per share (EPS) of €0.076 in 2023. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.

The average the analysts price target fell 16% to €8.67, suggesting thatthe analysts have other concerns, and the improved earnings per share outlook was not enough to allay them. 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. The most optimistic hGears analyst has a price target of €10.00 per share, while the most pessimistic values it at €7.00. 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 hGears shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 2.1% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 1.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - hGears is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around hGears' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of hGears' future valuation.

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. We have estimates - from multiple hGears analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with hGears .

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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.