Investors in Great Southern Bancorp, Inc. (NASDAQ:GSBC) had a good week, as its shares rose 6.9% to close at US$41.74 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$54m were what the analysts expected, Great Southern Bancorp surprised by delivering a (statutory) profit of US$0.96 per share, an impressive 28% above what was forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Great Southern Bancorp's three analysts is for revenues of US$202.8m in 2021, which would reflect a satisfactory 4.2% increase on its sales over the past 12 months. Statutory earnings per share are forecast to tumble 24% to US$3.19 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$203.4m and earnings per share (EPS) of US$2.78 in 2021. Although the revenue estimates have not really changed, we can see there's been a substantial gain in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.3% to US$46.33. 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 Great Southern Bancorp at US$51.00 per share, while the most bearish prices it at US$44.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Great Southern Bancorp's rate of growth is expected to accelerate meaningfully, with the forecast 4.2% revenue growth noticeably faster than its historical growth of 1.1%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Great Southern Bancorp is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Great Southern Bancorp'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 also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Great Southern Bancorp going out to 2022, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Great Southern Bancorp that you should be aware of.
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