DNB Bank ASA Just Recorded A 11% EPS Beat: Here's What Analysts Are Forecasting Next

A week ago, DNB Bank ASA (OB:DNB) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. DNB Bank beat earnings, with revenues hitting kr16b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 11%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for DNB Bank

Taking into account the latest results, the current consensus from DNB Bank's 17 analysts is for revenues of kr64.3b in 2022, which would reflect a modest 5.1% increase on its sales over the past 12 months. Per-share earnings are expected to rise 5.7% to kr18.46. Before this earnings report, the analysts had been forecasting revenues of kr63.4b and earnings per share (EPS) of kr17.86 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at kr213, 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. The most optimistic DNB Bank analyst has a price target of kr275 per share, while the most pessimistic values it at kr147. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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 DNB Bank's rate of growth is expected to accelerate meaningfully, with the forecast 10% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect DNB Bank to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around DNB Bank'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 in mind, we wouldn't be too quick to come to a conclusion on DNB Bank. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple DNB Bank analysts - going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - DNB Bank has 1 warning sign we think you should be aware of.

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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.