Farmers & Merchants Bancorp, Inc. (NASDAQ:FMAO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the latest upgrade, the three analysts covering Farmers & Merchants Bancorp provided consensus estimates of US$70m revenue in 2021, which would reflect a perceptible 6.5% decline on its sales over the past 12 months. Statutory earnings per share are presumed to increase 3.3% to US$1.95. Previously, the analysts had been modelling revenues of US$63m and earnings per share (EPS) of US$1.69 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 13% by the end of 2021. This indicates a significant reduction from annual growth of 12% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.9% annually for the foreseeable future. It's pretty clear that Farmers & Merchants Bancorp's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. With a serious upgrade to expectations, it might be time to take another look at Farmers & Merchants Bancorp.
Better yet, our automated discounted cash flow calculation (DCF) suggests Farmers & Merchants Bancorp could be moderately undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
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Farmers & Merchants Bancorp
Farmers & Merchants Bancorp, Inc. operates as the bank holding company for The Farmers & Merchants State Bank that provides commercial banking services to individuals and small businesses in northwest Ohio and northeast Indiana.
Flawless balance sheet with solid track record and pays a dividend.