It's shaping up to be a tough period for Heritage Global Inc. (NASDAQ:HGBL), which a week ago released some disappointing third-quarter results that could have a notable impact on how the market views the stock. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (US$10m) coming in 22% below what they had expected. Statutory earnings per share of US$0.03 fell 50% short. 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. 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 most recent consensus for Heritage Global from twin analysts is for revenues of US$60.3m in 2025. If met, it would imply a sizeable 21% increase on its revenue over the past 12 months. Statutory earnings per share are expected to dip 5.3% to US$0.26 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$61.7m and earnings per share (EPS) of US$0.29 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

The analysts made no major changes to their price target of US$4.33, suggesting the downgrades are not expected to have a long-term impact on Heritage Global's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Heritage Global's past performance and to peers in the same industry. We would highlight that Heritage Global's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2025 being well below the historical 21% 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 5.7% annually. Even after the forecast slowdown in growth, it seems obvious that Heritage Global is also expected 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. They also downgraded Heritage Global's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at US$4.33, 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 Heritage Global. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Heritage Global going out as far as 2025, and you can see them free on our platform here.

Even so, be aware that Heritage Global is showing 2 warning signs in our investment analysis , you should know about...

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