H&E Equipment Services, Inc. Beat Revenue Forecasts By 5.3%: Here's What Analysts Are Forecasting Next

There's been a notable change in appetite for H&E Equipment Services, Inc. (NASDAQ:HEES) shares in the week since its quarterly report, with the stock down 20% to US$47.05. H&E Equipment Services beat revenue expectations by 5.3%, at US$371m. Statutory earnings per share (EPS) came in at US$0.71, some 3.8% short of analyst 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for H&E Equipment Services

After the latest results, the five analysts covering H&E Equipment Services are now predicting revenues of US$1.56b in 2024. If met, this would reflect a credible 2.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to decline 13% to US$4.09 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.58b and earnings per share (EPS) of US$4.79 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$66.40, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values H&E Equipment Services at US$71.00 per share, while the most bearish prices it at US$60.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting H&E Equipment Services is an easy business to forecast or the the analysts are all using similar assumptions.

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 can infer from the latest estimates that forecasts expect a continuation of H&E Equipment Services'historical trends, as the 3.6% annualised revenue growth to the end of 2024 is roughly in line with the 3.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.7% per year. So it's pretty clear that H&E Equipment Services is expected to grow slower than similar companies in the same industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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 US$66.40, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on H&E Equipment Services. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple H&E Equipment Services analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for H&E Equipment Services that you need to take into consideration.

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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.