Last week saw the newest yearly earnings release from Heritage Financial Corporation (NASDAQ:HFWA), an important milestone in the company's journey to build a stronger business. Results were roughly in line with estimates, with revenues of US$250m and statutory earnings per share of US$2.31. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Heritage Financial from six analysts is for revenues of US$283.1m in 2023 which, if met, would be a notable 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to accumulate 8.2% to US$2.52. Before this earnings report, the analysts had been forecasting revenues of US$287.0m and earnings per share (EPS) of US$2.61 in 2023. 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.
The consensus price target held steady at US$34.60, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Heritage Financial at US$38.00 per share, while the most bearish prices it at US$32.00. This is a very narrow spread of estimates, implying either that Heritage Financial is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Heritage Financial's growth to accelerate, with the forecast 13% annualised growth to the end of 2023 ranking favourably alongside historical growth of 6.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Heritage Financial to grow faster than the wider industry.
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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Heritage Financial. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Heritage Financial analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Heritage Financial you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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