Revenue Beat: Eastern Bankshares, Inc. Exceeded Revenue Forecasts By 9.5% And Analysts Are Updating Their Estimates

Eastern Bankshares, Inc. (NASDAQ:EBC) just released its latest quarterly results and things are looking bullish. The company beat expectations with revenues of US$180m arriving 9.5% ahead of forecasts. Statutory earnings per share (EPS) were US$0.31, 7.5% ahead of estimates. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Eastern Bankshares

Taking into account the latest results, the five analysts covering Eastern Bankshares provided consensus estimates of US$576.4m revenue in 2022, which would reflect a considerable 15% decline on its sales over the past 12 months. Statutory earnings per share are predicted to ascend 19% to US$1.32. Before this earnings report, the analysts had been forecasting revenues of US$675.9m and earnings per share (EPS) of US$1.24 in 2022. It looks like there's been a meaningful change to the consensus view following the recent earnings report, with the analysts making a substantial drop in to revenue forecasts and a slight bump in to next year's earnings estimates.

The consensus has made no major changes to the price target of US$24.30, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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 Eastern Bankshares at US$28.00 per share, while the most bearish prices it at US$22.00. 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. We would highlight that sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 13% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Eastern Bankshares is expected to lag 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 Eastern Bankshares' earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at US$24.30, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Eastern Bankshares. Long-term earnings power is much more important than next year's profits. We have forecasts for Eastern Bankshares going out to 2024, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Eastern Bankshares .

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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.