It's been a good week for Macatawa Bank Corporation (NASDAQ:MCBC) shareholders, because the company has just released its latest third-quarter results, and the shares gained 5.3% to US$7.57. It looks like a credible result overall - although revenues of US$21m were what the analysts expected, Macatawa Bank surprised by delivering a (statutory) profit of US$0.21 per share, an impressive 62% above what was forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Macatawa Bank's two analysts are forecasting 2021 revenues to be US$79.6m, approximately in line with the last 12 months. Statutory earnings per share are expected to nosedive 28% to US$0.62 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$79.4m and earnings per share (EPS) of US$0.58 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$8.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.
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 the forecast 1.1% revenue decline a notable change from historical growth of 5.6% 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 1.4% annually for the foreseeable future. It's pretty clear that Macatawa Bank's revenues are expected to perform substantially worse than 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 Macatawa Bank's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Macatawa Bank's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Macatawa Bank going out as far as 2022, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Macatawa Bank (including 1 which can't be ignored) .
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