It’s been a good week for Preferred Bank (NASDAQ:PFBC) shareholders, because the company has just released its latest yearly results, and the shares gained 3.8% to US$63.10. Results look mixed – while revenue fell marginally short of analyst estimates at US$169m, statutory earnings were in line with expectations, at US$5.16 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what top 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 analysts’ statutory forecasts suggest is in store for next year.
Check out our latest analysis for Preferred Bank
NasdaqGS:PFBC Past and Future Earnings, January 27th 2020
After the latest results, the five analysts covering Preferred Bank are now predicting revenues of US$178.6m in 2020. If met, this would reflect a credible 5.9% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$5.23, approximately in line with the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$177.0m and earnings per share (EPS) of US$5.13 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 5.4% to US$63.00, suggesting that higher earnings estimates flow through to the stock’s valuation as well. 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 Preferred Bank at US$65.00 per share, while the most bearish prices it at US$59.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how Preferred Bank forecasts compare to the wider market’s forecast performance. It’s pretty clear that analysts expect Preferred Bank’s revenue growth will slow down substantially, with revenues next year expected to grow 5.9%, compared to a historical growth rate of 18% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Preferred Bank to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Preferred Bank following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Preferred Bank going out to 2021, and you can see them free on our platform here.
You can also see our analysis of Preferred Bank’s Board and CEO remuneration and experience, and whether company insiders have been buying stock.
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