Investors in Brookline Bancorp, Inc. (NASDAQ:BRKL) had a good week, as its shares rose 4.8% to close at US$9.96 following the release of its second-quarter results. Revenues were US$71m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.25, an impressive 51% ahead of estimates. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the six analysts covering Brookline Bancorp are now predicting revenues of US$280.9m in 2020. If met, this would reflect a sizeable 27% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dip 8.9% to US$0.54 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$284.2m and earnings per share (EPS) of US$0.37 in 2020. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.
The consensus price target was unchanged at US$11.60, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Brookline Bancorp, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$11.00 per share. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s clear from the latest estimates that Brookline Bancorp’s rate of growth is expected to accelerate meaningfully, with the forecast 27% revenue growth noticeably faster than its historical growth of 5.3%p.a. 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. Factoring in the forecast acceleration in revenue, it’s pretty clear that Brookline Bancorp is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Brookline Bancorp’s earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. 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 said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have forecasts for Brookline Bancorp going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Brookline Bancorp that you need to take into consideration.
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