Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) just released its latest second-quarter results and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$175m, some 5.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.38, 36% ahead of expectations. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 Home Bancshares (Conway AR) from seven analysts is for revenues of US$683.6m in 2020 which, if met, would be a solid 19% increase on its sales over the past 12 months. Statutory earnings per share are forecast to shrink 7.1% to US$1.18 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$668.5m and earnings per share (EPS) of US$1.02 in 2020. So it seems there’s been a definite increase in optimism about Home Bancshares (Conway AR)’s future following the latest results, with a substantial gain in the earnings per share forecasts in particular.
It will come as no surprise to learn that the analysts have increased their price target for Home Bancshares (Conway AR) 9.8% to US$18.25on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Home Bancshares (Conway AR) at US$19.00 per share, while the most bearish prices it at US$17.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Home Bancshares (Conway AR) is an easy business to forecast or the the analysts are all using similar 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. The analysts are definitely expecting Home Bancshares (Conway AR)’s growth to accelerate, with the forecast 19% growth ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.9% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Home Bancshares (Conway AR) to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Home Bancshares (Conway AR)’s earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple Home Bancshares (Conway AR) analysts – going out to 2022, 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 1 warning sign with Home Bancshares (Conway AR) , and understanding it should be part of your investment process.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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