H & M Hennes & Mauritz AB (publ) Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a mediocre week for H & M Hennes & Mauritz AB (publ) (STO:HM B) shareholders, with the stock dropping 14% to kr143 in the week since its latest full-year results. It was not a great result overall. While revenues of kr236b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 15% to hit kr5.35 per share. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for H & M Hennes & Mauritz

Taking into account the latest results, H & M Hennes & Mauritz's 27 analysts currently expect revenues in 2024 to be kr239.3b, approximately in line with the last 12 months. Per-share earnings are expected to leap 63% to kr8.84. In the lead-up to this report, the analysts had been modelling revenues of kr242.7b and earnings per share (EPS) of kr9.14 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 small dip in their earnings per share forecasts.

The average price target fell 6.2% to kr162, with reduced earnings forecasts clearly tied to a lower valuation estimate. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on H & M Hennes & Mauritz, with the most bullish analyst valuing it at kr200 and the most bearish at kr114 per share. 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 H & M Hennes & Mauritz shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 1.4% growth on an annualised basis. That is in line with its 1.2% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 3.4% annually. So it's pretty clear that H & M Hennes & Mauritz is expected to grow slower than similar companies in the same industry.

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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of H & M Hennes & Mauritz's 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 forecasts for H & M Hennes & Mauritz going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for H & M Hennes & Mauritz that 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.