VersaBank Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

It's been a mediocre week for VersaBank (TSE:VBNK) shareholders, with the stock dropping 11% to CA$14.20 in the week since its latest first-quarter results. VersaBank missed revenue estimates by 3.4%, coming in atCA$29m, although statutory earnings per share (EPS) of CA$0.48 beat expectations, coming in 5.1% ahead of analyst 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for VersaBank

Following the latest results, VersaBank's three analysts are now forecasting revenues of CA$124.1m in 2024. This would be a solid 11% improvement in revenue compared to the last 12 months. Per-share earnings are expected to ascend 17% to CA$2.00. Before this earnings report, the analysts had been forecasting revenues of CA$130.8m and earnings per share (EPS) of CA$2.01 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The analysts have also increased their price target 7.6% to CA$17.75, clearly signalling that lower revenue forecasts next year are not expected to have a material impact on VersaBank's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic VersaBank analyst has a price target of CA$18.00 per share, while the most pessimistic values it at CA$17.50. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the VersaBank's past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 15% growth on an annualised basis. That is in line with its 17% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.1% per year. So although VersaBank is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also downgraded VersaBank's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 VersaBank going out to 2025, and you can see them free on our platform here..

We also provide an overview of the VersaBank Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.