H & M Hennes & Mauritz AB (publ) Just Missed Earnings - But Analysts Have Updated Their Models

Last week saw the newest first-quarter earnings release from H & M Hennes & Mauritz AB (publ) (STO:HM B), 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 kr55b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 51% to hit kr0.37 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, H & M Hennes & Mauritz's 26 analysts currently expect revenues in 2025 to be kr237.0b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 9.1% to kr7.46. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr242.3b and earnings per share (EPS) of kr8.13 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

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

The analysts made no major changes to their price target of kr146, suggesting the downgrades are not expected to have a long-term impact on H & M Hennes & Mauritz's valuation. 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. Currently, the most bullish analyst values H & M Hennes & Mauritz at kr190 per share, while the most bearish prices it at kr110. 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 H & M Hennes & Mauritz's past performance and to peers in the same industry. We would highlight that H & M Hennes & Mauritz's revenue growth is expected to slow, with the forecast 0.5% annualised growth rate until the end of 2025 being well below the historical 4.3% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.6% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than H & M Hennes & Mauritz.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at kr146, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for H & M Hennes & Mauritz going out to 2027, 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.