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It's shaping up to be a tough period for Hammond Power Solutions Inc. (TSE:HPS.A), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Hammond Power Solutions missed analyst forecasts, with revenues of CA$192m and statutory earnings per share (EPS) of CA$1.37, falling short by 2.0% and 9.0% respectively. 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.
Check out our latest analysis for Hammond Power Solutions
After the latest results, the dual analysts covering Hammond Power Solutions are now predicting revenues of CA$862.4m in 2025. If met, this would reflect a decent 12% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to step up 11% to CA$6.33. Before this earnings report, the analysts had been forecasting revenues of CA$880.0m and earnings per share (EPS) of CA$7.13 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
The analysts made no major changes to their price target of CA$168, suggesting the downgrades are not expected to have a long-term impact on Hammond Power Solutions' valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Hammond Power Solutions' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Hammond Power Solutions' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 9.8% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 19% per year. Factoring in the forecast slowdown in growth, it seems obvious that Hammond Power Solutions is also expected to grow slower than other industry participants.
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 negative side, they also downgraded their revenue estimates, and forecasts imply they will 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.