SpareBank 1 SR-Bank ASA Just Missed EPS By 5.4%: Here's What Analysts Think Will Happen Next

It's been a good week for SpareBank 1 SR-Bank ASA (OB:SRBNK) shareholders, because the company has just released its latest quarterly results, and the shares gained 2.7% to kr131. Revenues of kr2.4b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at kr4.26, missing estimates by 5.4%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for SpareBank 1 SR-Bank

Following the latest results, SpareBank 1 SR-Bank's four analysts are now forecasting revenues of kr9.69b in 2024. This would be a reasonable 3.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 9.7% to kr15.77 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr10.2b and earnings per share (EPS) of kr15.41 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

There's been no real change to the average price target of kr152, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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. Currently, the most bullish analyst values SpareBank 1 SR-Bank at kr158 per share, while the most bearish prices it at kr148. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's pretty clear that there is an expectation that SpareBank 1 SR-Bank's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.0% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 1.3% annually. Even after the forecast slowdown in growth, it seems obvious that SpareBank 1 SR-Bank is also expected to grow faster than the wider industry.

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 SpareBank 1 SR-Bank following these results. They also downgraded SpareBank 1 SR-Bank's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target held steady at kr152, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for SpareBank 1 SR-Bank going out to 2026, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for SpareBank 1 SR-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.