Last week, you might have seen that Cathay General Bancorp (NASDAQ:CATY) released its annual result to the market. The early response was not positive, with shares down 2.9% to US$36.82 in the past week. It was a credible result overall, with revenues of US$627m and statutory earnings per share of US$3.48 both in line with analyst estimates, showing that Cathay General Bancorp is executing in line with expectations. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We’ve gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following last week’s earnings report, Cathay General Bancorp’s six analysts are forecasting 2020 revenues to be US$622.6m, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 4.7% to US$3.33 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$627.0m and earnings per share (EPS) of US$3.33 in 2020. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$39.17. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Cathay General Bancorp at US$42.00 per share, while the most bearish prices it at US$37.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that sales are expected to reverse, with the forecast 0.6% revenue decline a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 4.9% annually for the foreseeable future. It’s pretty clear that Cathay General Bancorp’s revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Cathay General Bancorp’s revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Cathay General Bancorp. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Cathay General Bancorp going out to 2021, and you can see them free on our platform here..
You can also see whether Cathay General Bancorp is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.