H & M Hennes & Mauritz AB (publ) Just Recorded A 68% EPS Beat: Here's What Analysts Are Forecasting Next

It's been a pretty great week for H & M Hennes & Mauritz AB (publ) (STO:HM B) shareholders, with its shares surging 15% to kr175 in the week since its latest first-quarter results. Revenues were kr54b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at kr0.75, an impressive 68% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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 kr239.1b, approximately in line with the last 12 months. Per-share earnings are expected to leap 51% to kr8.81. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr238.3b and earnings per share (EPS) of kr8.69 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at kr165. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic H & M Hennes & Mauritz analyst has a price target of kr210 per share, while the most pessimistic values it at kr120. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. The analysts are definitely expecting H & M Hennes & Mauritz's growth to accelerate, with the forecast 2.4% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.3% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, H & M Hennes & Mauritz is expected to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will 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.

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 forecasts for H & M Hennes & Mauritz 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.