Halma plc (LON:HLMA) Just Released Its Interim Results And Analysts Are Updating Their Estimates

Halma plc (LON:HLMA) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to UK£23.81 in the week after its latest half-yearly results. It was a credible result overall, with revenues of UK£618m and statutory earnings per share of UK£0.49 both in line with analyst estimates, showing that Halma is executing in line with expectations. The analysts 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 analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Halma

Following last week's earnings report, Halma's twelve analysts are forecasting 2021 revenues to be UK£1.32b, approximately in line with the last 12 months. Statutory per share are forecast to be UK£0.46, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£1.33b and earnings per share (EPS) of UK£0.46 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at UK£21.74. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Halma, with the most bullish analyst valuing it at UK£26.50 and the most bearish at UK£17.90 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Halma's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Halma's revenue growth will slow down substantially, with revenues next year expected to grow 1.2%, compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.2% next year. Factoring in the forecast slowdown in growth, it seems obvious that Halma is also expected to grow slower than other industry participants.

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. 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 held steady at UK£21.74, 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 Halma. Long-term earnings power is much more important than next year's profits. We have forecasts for Halma going out to 2024, and you can see them free on our platform here.

You can also see whether Halma is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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