H & M Hennes & Mauritz AB (publ) Just Missed EPS By 26%: Here's What Analysts Think Will Happen Next

The analysts might have been a bit too bullish on H & M Hennes & Mauritz AB (publ) (STO:HM B), given that the company fell short of expectations when it released its quarterly results last week. Results showed a clear earnings miss, with kr59b revenue coming in 2.2% lower than what the analystsexpected. Statutory earnings per share (EPS) of kr1.44 missed the mark badly, arriving some 26% below what was expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for H & M Hennes & Mauritz

Taking into account the latest results, the consensus forecast from H & M Hennes & Mauritz's 26 analysts is for revenues of kr245.3b in 2025. This reflects a modest 4.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 48% to kr9.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr245.8b and earnings per share (EPS) of kr9.62 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr170, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting H & M Hennes & Mauritz's growth to accelerate, with the forecast 3.5% annualised growth to the end of 2025 ranking favourably alongside historical growth of 2.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 4.3% annually. So it's clear that despite the acceleration in growth, H & M Hennes & Mauritz is expected to grow meaningfully slower than the industry average.

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 kr170, with the latest estimates not enough to have an impact on their price targets.

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.

You should always think about risks though. Case in point, we've spotted 1 warning sign for H & M Hennes & Mauritz 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.