Shareholders might have noticed that National Australia Bank Limited (ASX:NAB) filed its half-yearly result this time last week. The early response was not positive, with shares down 3.1% to AU$31.62 in the past week. It was a credible result overall, with revenues of AU$8.8b and statutory earnings per share of AU$1.05 both in line with analyst estimates, showing that National Australia Bank 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 experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from National Australia Bank's 14 analysts is for revenues of AU$18.1b in 2022, which would reflect a modest 2.7% increase on its sales over the past 12 months. Statutory earnings per share are forecast to dip 3.4% to AU$2.05 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$17.9b and earnings per share (EPS) of AU$1.98 in 2022. So the consensus seems to have become somewhat more optimistic on National Australia Bank's earnings potential following these results.
There's been no major changes to the consensus price target of AU$33.17, 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. Currently, the most bullish analyst values National Australia Bank at AU$35.40 per share, while the most bearish prices it at AU$28.17. 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.
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 forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that National Australia Bank's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 5.5% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 2.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.5% annually. So it looks like National Australia Bank is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards National Australia Bank following these results. Happily, there were no major changes to revenue forecasts, with the business still 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for National Australia Bank going out to 2024, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with National Australia Bank (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.