RBB Bancorp (NASDAQ:RBB) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 2.8% to hit US$27m. RBB Bancorp reported statutory earnings per share (EPS) US$0.33, which was a notable 15% above what the analysts had forecast. 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’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for RBB Bancorp from three analysts is for revenues of US$113.6m in 2020 which, if met, would be a notable 8.9% increase on its sales over the past 12 months. Statutory earnings per share are expected to decline 15% to US$1.36 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$111.5m and earnings per share (EPS) of US$1.27 in 2020. So the consensus seems to have become somewhat more optimistic on RBB Bancorp’s earnings potential following these results.
The consensus price target fell 18% to US$14.00, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. 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. The most optimistic RBB Bancorp analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$13.00. This is a very narrow spread of estimates, implying either that RBB Bancorp is an easy company to value, or – more likely – the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that RBB Bancorp’s revenue growth is expected to slow, with forecast 8.9% increase next year well below the historical 21%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.9% next year. So it’s pretty clear that, while RBB Bancorp’s revenue growth is expected to slow, it’s still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around RBB Bancorp’s earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of RBB Bancorp’s future valuation.
With that in mind, we wouldn’t be too quick to come to a conclusion on RBB 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 RBB Bancorp going out to 2022, and you can see them free on our platform here..
Plus, you should also learn about the 1 warning sign we’ve spotted with RBB Bancorp .
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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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