Investors in Heritage Financial Corporation (NASDAQ:HFWA) had a good week, as its shares rose 5.8% to close at US$21.82 following the release of its quarterly results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$58m, statutory earnings beat expectations by a notable 22%, coming in at US$0.46 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the five analysts covering Heritage Financial are now predicting revenues of US$216.6m in 2021. If met, this would reflect a notable 13% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 2.1% to US$1.12. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$223.6m and earnings per share (EPS) of US$1.14 in 2021. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The average price target was steady at US$22.25even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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. There are some variant perceptions on Heritage Financial, with the most bullish analyst valuing it at US$24.00 and the most bearish at US$20.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Heritage Financial is an easy business to forecast or the the analysts are all using similar assumptions.
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. It's clear from the latest estimates that Heritage Financial's rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 8.6%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. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Heritage Financial to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. They also downgraded their revenue estimates, although industry data suggests that Heritage Financial's revenues are expected to grow faster than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target held steady at US$22.25, 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 Heritage Financial going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - Heritage Financial has 1 warning sign we think you should be aware of.
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This article by Simply Wall St is general in nature. 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.
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