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It's been a mediocre week for Heritage Global Inc. (NASDAQ:HGBL) shareholders, with the stock dropping 15% to US$2.81 in the week since its latest third-quarter results. Statutory earnings per share disappointed, coming in -29% short of expectations, at US$0.05. Fortunately revenue performance was a lot stronger at US$16m arriving 16% ahead of predictions. 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. 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 Global
Taking into account the latest results, the most recent consensus for Heritage Global from dual analysts is for revenues of US$63.5m in 2024. If met, it would imply a reasonable 7.5% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to dive 33% to US$0.32 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$59.8m and earnings per share (EPS) of US$0.32 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.
The consensus price target increased 9.7% to US$5.67, with an improved revenue forecast carrying the promise of a more valuable business, in time.
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 Global's revenue growth is expected to slow, with the forecast 6.0% annualised growth rate until the end of 2024 being well below the historical 19% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Heritage Global is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.