First Community Corporation (NASDAQ:FCCO) just released its latest third-quarter results and things are looking bullish. First Community beat earnings, with revenues hitting US$14m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 14%. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the six analysts covering First Community are now predicting revenues of US$53.0m in 2021. If met, this would reflect a notable 8.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shrink 9.1% to US$1.15 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$51.7m and earnings per share (EPS) of US$1.07 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$16.30, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on First Community, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$15.50 per share. This is a very narrow spread of estimates, implying either that First Community is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 8.8%, in line with its 9.3% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 1.5% next year. So although First Community 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 here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards First Community following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$16.30, 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 First Community. Long-term earnings power is much more important than next year's profits. We have forecasts for First Community going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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