Stock Analysis

HRnetGroup Limited Just Recorded A 21% EPS Beat: Here's What Analysts Are Forecasting Next

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HRnetGroup Limited (SGX:CHZ) just released its annual report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 7.7% to hit S$433m. HRnetGroup also reported a statutory profit of S$0.047, which was an impressive 21% above what the analysts had forecast. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for HRnetGroup

SGX:CHZ Earnings and Revenue Growth March 2nd 2021

Taking into account the latest results, HRnetGroup's three analysts currently expect revenues in 2021 to be S$427.1m, approximately in line with the last 12 months. Statutory per share are forecast to be S$0.047, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of S$418.2m and earnings per share (EPS) of S$0.038 in 2021. So it seems there's been a definite increase in optimism about HRnetGroup's future following the latest results, with a considerable lift to the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of S$0.57, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic HRnetGroup analyst has a price target of S$0.70 per share, while the most pessimistic values it at S$0.50. 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 HRnetGroup shareholders.

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. We would highlight that sales are expected to reverse, with the forecast 1.4% revenue decline a notable change from historical growth of 4.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% next year. It's pretty clear that HRnetGroup's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards HRnetGroup following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at S$0.57, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple HRnetGroup analysts - going out to 2023, and you can see them free on our platform here.

You still need to take note of risks, for example - HRnetGroup has 2 warning signs we think you should be aware of.

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