Investors in SpareBank 1 Nord-Norge (OB:NONG) had a good week, as its shares rose 3.9% to close at kr72.20 following the release of its quarterly results. Results were roughly in line with estimates, with revenues of kr900m and earnings per share of kr1.76. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. Readers will be glad to know we’ve aggregated the latest forecasts to see whether analysts have changed their mind on SpareBank 1 Nord-Norge after the latest results.
After the latest results, the consensus from SpareBank 1 Nord-Norge’s five analysts is for revenues of kr4.0b in 2020, which would reflect a noticeable 4.4% decline in sales compared to the last year of performance. Earnings per share are expected to sink 17% to kr8.36 in the same period. In the lead-up to this report, analysts had been modelling revenues of kr3.9b and earnings per share (EPS) of kr8.16 in 2020. So the consensus seems to have become somewhat more optimistic on SpareBank 1 Nord-Norge’s earnings potential following these results.
There’s been no major changes to the consensus price target of kr79.40, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic SpareBank 1 Nord-Norge analyst has a price target of kr85.00 per share, while the most pessimistic values it at kr70.00. 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.
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 analysts are more or less bullish relative to other companies in the market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.4% a significant reduction from annual growth of 10% 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 3.1% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – analysts also expect SpareBank 1 Nord-Norge to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around SpareBank 1 Nord-Norge’s earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that SpareBank 1 Nord-Norge’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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates – from multiple SpareBank 1 Nord-Norge analysts – going out to 2021, and you can see them free on our platform here.
You can also see whether SpareBank 1 Nord-Norge is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.