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Earnings Beat: Hexagon AB (publ) Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Hexagon AB (publ) (STO:HEXA B) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat forecasts, with revenue of €1.0b, some 3.7% above estimates, and statutory earnings per share (EPS) coming in at €0.17, 46% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the recent earnings report, the consensus from 14 analysts covering Hexagon is for revenues of €4.94b in 2027. This implies a chunky 11% decline in revenue compared to the last 12 months. Statutory earnings per share are expected to plunge 67% to €0.32 in the same period. In the lead-up to this report, the analysts had been modelling revenues of €4.79b and earnings per share (EPS) of €0.31 in 2027. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
See our latest analysis for Hexagon
Despite these upgrades,the analysts have not made any major changes to their price target of kr107, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Hexagon analyst has a price target of kr135 per share, while the most pessimistic values it at kr85.10. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 8.8% by the end of 2027. This indicates a significant reduction from annual growth of 3.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.1% annually for the foreseeable future. It's pretty clear that Hexagon's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Hexagon's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. The consensus price target held steady at kr107, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Hexagon going out to 2028, 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 2 warning signs with Hexagon (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.
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