Norsk Hydro ASA Just Missed Earnings - But Analysts Have Updated Their Models

Last week saw the newest first-quarter earnings release from Norsk Hydro ASA (OB:NHY), an important milestone in the company's journey to build a stronger business. It looks like a pretty bad result, all things considered. Although revenues of kr48b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 56% to hit kr0.47 per share. 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.

View our latest analysis for Norsk Hydro

Taking into account the latest results, Norsk Hydro's twelve analysts currently expect revenues in 2024 to be kr193.7b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 181% to kr4.57. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr187.7b and earnings per share (EPS) of kr4.88 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a to revenue, the consensus also made a small dip in its earnings per share forecasts.

The consensus price target was unchanged at kr76.08, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. 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 Norsk Hydro at kr90.00 per share, while the most bearish prices it at kr50.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Norsk Hydro's revenue growth is expected to slow, with the forecast 0.7% annualised growth rate until the end of 2024 being well below the historical 9.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 1.5% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Norsk Hydro.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Norsk Hydro. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Norsk Hydro. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Norsk Hydro analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Norsk Hydro you should be aware 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.