Earnings Update: H & M Hennes & Mauritz AB (publ) (STO:HM B) Just Reported Its Half-Year Results And Analysts Are Updating Their Forecasts

It's been a sad week for H & M Hennes & Mauritz AB (publ) (STO:HM B), who've watched their investment drop 14% to kr168 in the week since the company reported its half-year result. Revenues of kr113b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at kr3.85, missing estimates by 4.9%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for H & M Hennes & Mauritz

Following last week's earnings report, H & M Hennes & Mauritz's 26 analysts are forecasting 2024 revenues to be kr238.3b, approximately in line with the last 12 months. Per-share earnings are expected to soar 26% to kr8.74. Before this earnings report, the analysts had been forecasting revenues of kr240.3b and earnings per share (EPS) of kr9.07 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.

The consensus price target held steady at kr176, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 H & M Hennes & Mauritz, with the most bullish analyst valuing it at kr210 and the most bearish at kr120 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that H & M Hennes & Mauritz's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.3% growth on an annualised basis. This is compared to a historical growth rate of 2.2% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% per year. Factoring in the forecast slowdown in growth, it seems obvious that H & M Hennes & Mauritz 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 H & M Hennes & Mauritz. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at kr176, 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 H & M Hennes & Mauritz. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple H & M Hennes & Mauritz analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for H & M Hennes & Mauritz that you need to be mindful 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.

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