Employers Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

The yearly results for Employers Holdings, Inc. (NYSE:EIG) were released last week, making it a good time to revisit its performance. Revenues were US$851m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$4.45 were also better than expected, beating analyst predictions by 16%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Employers Holdings after the latest results.

View our latest analysis for Employers Holdings

Taking into account the latest results, the consensus forecast from Employers Holdings' three analysts is for revenues of US$890.9m in 2024. This reflects an okay 4.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to descend 15% to US$3.99 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$898.6m and earnings per share (EPS) of US$3.74 in 2024. So the consensus seems to have become somewhat more optimistic on Employers Holdings' earnings potential following these results.

The consensus price target was unchanged at US$52.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Employers Holdings at US$55.00 per share, while the most bearish prices it at US$50.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Employers Holdings' past performance and to peers in the same industry. One thing stands out from these estimates, which is that Employers Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.7% annualised growth until the end of 2024. If achieved, this would be a much better result than the 0.7% annual decline 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 revenue grow 5.9% per year. Although Employers Holdings' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Employers Holdings' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Employers Holdings' revenue is expected to 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.

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 estimates - from multiple Employers Holdings analysts - going out to 2025, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Employers Holdings you should know about.

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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.