Last week, you might have seen that Heartland Express, Inc. (NASDAQ:HTLD) released its annual result to the market. The early response was not positive, with shares down 2.2% to US$12.93 in the past week. It looks like a credible result overall - although revenues of US$1.2b were what the analysts expected, Heartland Express surprised by delivering a (statutory) profit of US$0.19 per share, an impressive 372% above what was forecast. 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.
Taking into account the latest results, the five analysts covering Heartland Express provided consensus estimates of US$1.14b revenue in 2024, which would reflect a perceptible 5.9% decline over the past 12 months. Statutory earnings per share are expected to reduce 4.1% to US$0.18 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.20b and earnings per share (EPS) of US$0.23 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a large cut to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$13.67 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Heartland Express analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$12.00. This is a very narrow spread of estimates, implying either that Heartland Express is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.9% by the end of 2024. This indicates a significant reduction from annual growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.3% per year. It's pretty clear that Heartland Express' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Heartland Express. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Heartland Express. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Heartland Express analysts - going out to 2025, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Heartland Express , and understanding them should be part of your investment process.
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