Results: Hubbell Incorporated Beat Earnings Expectations And Analysts Now Have New Forecasts
Hubbell Incorporated (NYSE:HUBB) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to US$144 in the week after its latest quarterly results. The result was positive overall - although revenues of US$1.1b were in line with what the analysts predicted, Hubbell surprised by delivering a statutory profit of US$1.96 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Hubbell
Taking into account the latest results, the consensus forecast from Hubbell's eight analysts is for revenues of US$4.39b in 2021, which would reflect a reasonable 3.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 7.8% to US$7.38. In the lead-up to this report, the analysts had been modelling revenues of US$4.41b and earnings per share (EPS) of US$7.35 in 2021. So it's pretty clear that, although the 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 US$162, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Hubbell analyst has a price target of US$181 per share, while the most pessimistic values it at US$147. This is a very narrow spread of estimates, implying either that Hubbell 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. It's pretty clear that there is an expectation that Hubbell's revenue growth will slow down substantially, with revenues next year expected to grow 3.3%, compared to a historical growth rate of 7.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.4% next year. Factoring in the forecast slowdown in growth, it seems obvious that Hubbell 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$162, 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 Hubbell. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Hubbell analysts - going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Hubbell .
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
