Last week, you might have seen that Michael Hill International Limited (ASX:MHJ) released its half-yearly result to the market. The early response was not positive, with shares down 4.2% to AU$0.57 in the past week. Statutory earnings per share fell badly short of expectations, coming in at AU$0.043, some 26% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at AU$330m. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, Michael Hill International's four analysts currently expect revenues in 2020 to be AU$577.6m, approximately in line with the last 12 months. Statutory earnings per share are expected to shoot up 26% to AU$0.065. Yet prior to the latest earnings, analysts had been forecasting revenues of AU$580.7m and earnings per share (EPS) of AU$0.065 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of AU$0.72, suggesting that the company has met expectations in its recent result. 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. Currently, the most bullish analyst values Michael Hill International at AU$0.80 per share, while the most bearish prices it at AU$0.61. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company 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 sales are expected to reverse, with the forecast 1.3% revenue decline a notable change from historical growth of 2.7% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 6.4% next year. It's pretty clear that Michael Hill International's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Michael Hill International's revenues are expected to perform worse than the wider market. The consensus price target held steady at AU$0.72, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Michael Hill International analysts - going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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