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Revenue Beat: Hufvudstaden AB (publ) Beat Analyst Estimates By 39%
Investors in Hufvudstaden AB (publ) (STO:HUFV A) had a good week, as its shares rose 7.8% to close at kr118 following the release of its quarterly results. Revenue of kr826m beat expectations by an impressive 39%, while statutory earnings per share (EPS) were kr4.18, in line with estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the recent earnings report, the consensus from five analysts covering Hufvudstaden is for revenues of kr2.50b in 2027. This implies a concerning 25% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 9.0% to kr5.71 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr2.51b and earnings per share (EPS) of kr6.23 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
See our latest analysis for Hufvudstaden
The consensus price target held steady at kr128, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Hufvudstaden analyst has a price target of kr139 per share, while the most pessimistic values it at kr120. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Hufvudstaden 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 would highlight that revenue is expected to reverse, with a forecast 21% annualised decline to the end of 2027. That is a notable change from historical growth of 6.1% 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 3.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Hufvudstaden is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Hufvudstaden. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hufvudstaden's revenue is expected to perform worse than the wider industry. The consensus price target held steady at kr128, 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 Hufvudstaden. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Hufvudstaden going out to 2028, and you can see them free on our platform here..
Even so, be aware that Hufvudstaden is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...
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