Earnings Beat: Heritage Insurance Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Shareholders will be ecstatic, with their stake up 23% over the past week following Heritage Insurance Holdings, Inc.'s (NYSE:HRTG) latest yearly results. Revenues were US$735m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.73, an impressive 73% ahead of estimates. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Heritage Insurance Holdings

Taking into account the latest results, the current consensus from Heritage Insurance Holdings' three analysts is for revenues of US$770.9m in 2024. This would reflect a reasonable 4.8% increase on its revenue over the past 12 months. Statutory per share are forecast to be US$1.53, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$772.7m and earnings per share (EPS) of US$1.43 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 30% to US$10.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Heritage Insurance Holdings at US$11.00 per share, while the most bearish prices it at US$9.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Heritage Insurance Holdings' revenue growth is expected to slow, with the forecast 4.8% annualised growth rate until the end of 2024 being well below the historical 8.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that Heritage Insurance Holdings is also expected to grow slower than other industry participants.

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 Heritage Insurance Holdings following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Heritage Insurance Holdings' revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Heritage Insurance Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Heritage Insurance Holdings going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Heritage Insurance Holdings , and understanding this should be part of your investment process.

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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.