HEXPOL AB (publ) (STO:HPOL B) Just Released Its Second-Quarter Results And Analysts Are Updating Their Estimates

The second-quarter results for HEXPOL AB (publ) (STO:HPOL B) were released last week, making it a good time to revisit its performance. It was a credible result overall, with revenues of kr5.5b and statutory earnings per share of kr1.90 both in line with analyst estimates, showing that HEXPOL is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 HEXPOL

Following last week's earnings report, HEXPOL's six analysts are forecasting 2024 revenues to be kr21.2b, approximately in line with the last 12 months. Per-share earnings are expected to increase 4.5% to kr7.54. Before this earnings report, the analysts had been forecasting revenues of kr21.5b and earnings per share (EPS) of kr7.72 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr140, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 HEXPOL analyst has a price target of kr147 per share, while the most pessimistic values it at kr129. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that HEXPOL's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.9% growth on an annualised basis. This is 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 6.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that HEXPOL is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for HEXPOL. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that HEXPOL's revenue 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.

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. At Simply Wall St, we have a full range of analyst estimates for HEXPOL going out to 2026, and you can see them free on our platform here..

You can also view our analysis of HEXPOL's balance sheet, and whether we think HEXPOL is carrying too much debt, for free on our platform here.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com