Last week you might have seen this TowneBank (NASDAQ:TOWN) released its annual earnings to the market. The early response was not positive, with shares down 2.5% at US$31.12 last week. It was a professional result, with revenue of US$697 million ahead of expectations by 2.7% and statutory earnings per share of US$2.97, in line with analysts’ assessments. Earnings are an important time for investors because they can follow a company’s performance, watch what analysts predict for the next year, and see if there has been a change in sentiment towards the company. Readers will be happy to know that we’ve rounded up the latest statutory forecasts to see if analysts have changed their minds on TowneBank after the latest results.
Given the latest results, the current consensus, from the four analysts covering TowneBank, is for revenue of $645.8 million in 2022, which would reflect a noticeable 7.4% reduction in TowneBank sales over the past 12 month. Statutory earnings per share are expected to plunge 22% to US$2.34 over the same period. Prior to this earnings report, analysts were forecasting revenue of US$645.8 million and earnings per share (EPS) of US$2.34 in 2022. So it’s pretty clear that while analysts put updated their estimates, there has been no major change in expectations for the company following the latest results.
It will therefore come as no surprise to learn that the consensus price target is largely unchanged at US$35.50. This is not the only conclusion we can draw from this data, however, as some investors also like to consider the discrepancy in estimates when evaluating analyst price targets. There are a few variations in perception on TowneBank, with the most bullish analyst pricing it at $36.00 and the most bearish at $35.00 per share. Even so, with a relatively close group of estimates, it seems analysts are quite confident in their valuations, suggesting that TowneBank is an easy-to-predict business or that analysts are all using similar assumptions.
One way to get more context on these forecasts is to examine how they compare both to past performance and to the performance of other companies in the same industry. These estimates imply that sales are expected to slow, with a projected drop in annualized revenue of 7.4% by the end of 2022. This indicates a significant reduction from the annual growth of 11% over the past five years. Contrast that with our data, which suggests that other companies in the same industry should, overall, see revenue growth of 4.8% annually. It’s pretty clear that TowneBank’s earnings are expected to perform significantly worse than the industry as a whole.
The most obvious conclusion is that there has been no major shift in the company’s outlook lately, with analysts holding their earnings forecast flat, in line with previous estimates. On the positive side, there were no major changes in revenue estimates; although forecasts imply that revenues will underperform the industry as a whole. There was no real change from the consensus price target, suggesting that the company’s intrinsic value has not undergone major changes with the latest estimates.
That said, the company’s long-term earnings trajectory is much more important than next year. We have predictions for TowneBank going all the way to 2023, and you can see them for free on our platform here.
However, you should always think about the risks. Concrete example, we spotted 2 warning signs for TowneBank you should be aware, and one of them is a bit of a concern.
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