The full-year results for TowneBank (NASDAQ:TOWN) were released last week, making it a good time to revisit its performance. TowneBank reported US$555m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.92 beat expectations, being 2.9% higher than what analysts expected. 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.
Taking into account the latest results, the most recent consensus for TowneBank from four analysts is for revenues of US$575.8m in 2020, which is a reasonable 3.8% increase on its sales over the past 12 months. Statutory earnings per share are expected to accumulate 2.1% to US$1.97. In the lead-up to this report, analysts had been modelling revenues of US$576.1m and earnings per share (EPS) of US$1.86 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
There’s been no major changes to the consensus price target of US$28.33, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock’s valuation. 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. The most optimistic TowneBank analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$27.00. 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.
Further, we can compare these estimates to past performance, and see how TowneBank forecasts compare to the wider market’s forecast performance. We would highlight that TowneBank’s revenue growth is expected to slow, with forecast 3.8% increase next year well below the historical 17%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect TowneBank to grow slower than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards TowneBank following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will 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 said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for TowneBank going out to 2021, and you can see them free on our platform here..
You can also see whether TowneBank is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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