One of the big earnings results winners this season was ASX financials stock HMC Capital Ltd (ASX: HMC).
Investors were gobbling up this stock following its full-year results.
During FY26, HMC Capital expanded across all major verticals.
Included in the results yesterday:
- Operating EPS (pre-tax) of 40.4 cents per share, in line with FY26 guidance
- Underlying EPS (pre-tax) of 30.2 cents, excluding discontinued operations
- Fee-generating AUM grew 15% to $16.9 billion
- Recurring funds management revenue up 22% to $165.5 million
- FY26 dividend declared at 12.0 cents per share
- Tangible assets and undrawn debt capacity of $1.9 billion.
Investors were seemingly pleased with this ASX financials stock as its share price rose over 11% on the back of the announcement.
Despite the rise, HMC shares still sit well below yearly highs. In good news for prospective investors, the team at Bell Potter see yesterday's gain of a sign of what's to come in the next 12 months.
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Great results
Bell Potter's view is very positive, essentially arguing that the FY26 result sets up a stronger FY27 and that there is further upside beyond current guidance.
This ASX financials stock delivered FY26 pre-tax EPS of 40.4c, slightly ahead of Bell Potter's expectations and well above consensus.
More importantly, management guided to FY27 underlying EPS of at least 35c, versus 30.2c in FY26, implying roughly 16% underlying earnings growth.
The broker also highlighted that the balance sheet provides another potential upside lever.
HMC has around $500m of undrawn debt capacity, while its FY27 guidance does not assume any further capital recycling.
Given HMC has previously generated significant earnings from recycling its investments, Bell Potter believes there could be another $25–50m of underlying earnings upside if capital is deployed or recycled effectively.
As a result, Bell Potter has increased its FY27-FY29 post-tax EPS estimates by 25-30%.
Buy rating retained for this ASX financials stock
Based on this guidance, Bell Potter has retained its buy recommendation for this ASX financials stock.
The broker has also upgraded its price target $4.20 (previously $3.85), which indicates an upside potential of approximately 29%.
We recently upgraded HMC to Buy, with today's result giving us confidence that HMC is turning the corner from an earnings momentum perspective, and indeed HMC has articulated a clear message that earnings upside to items not included in guidance (eg capital recycling) exist. As headwinds turn to tailwinds, HMC screens inexpensively trading at just 9.3x 1yr forward underlying earnings.
