Secure Trust Bank PLC (LON:STB) Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?

It's been a good week for Secure Trust Bank PLC (LON:STB) shareholders, because the company has just released its latest full-year results, and the shares gained 5.1% to UK£12.93. Results look mixed - while revenue fell marginally short of analyst estimates at UK£162m, statutory earnings were in line with expectations, at UK£2.39 per share. 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.

See our latest analysis for Secure Trust Bank

Following the latest results, Secure Trust Bank's five analysts are now forecasting revenues of UK£184.1m in 2022. This would be a solid 14% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plunge 24% to UK£1.87 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£186.0m and earnings per share (EPS) of UK£2.00 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at UK£18.42, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. Currently, the most bullish analyst values Secure Trust Bank at UK£22.34 per share, while the most bearish prices it at UK£15.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. The analysts are definitely expecting Secure Trust Bank's growth to accelerate, with the forecast 14% annualised growth to the end of 2022 ranking favourably alongside historical growth of 11% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Secure Trust Bank to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Secure Trust Bank. 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 in mind, we wouldn't be too quick to come to a conclusion on Secure Trust Bank. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Secure Trust Bank analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Secure Trust Bank that we have uncovered.

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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.