Provident Bancorp, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Provident Bancorp, Inc. (NASDAQ:PVBC) released its yearly result to the market. The early response was not positive, with shares down 5.0% to US$11.53 in the past week. Provident Bancorp reported US$52m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.66 beat expectations, being 7.3% higher than what the analysts expected. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Provident Bancorp

Taking into account the latest results, the current consensus from Provident Bancorp's twin analysts is for revenues of US$54.6m in 2021, which would reflect an okay 4.2% increase on its sales over the past 12 months. Statutory earnings per share are expected to reduce 7.2% to US$0.61 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$55.7m and earnings per share (EPS) of US$0.63 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 18% to US$11.25despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Provident Bancorp's earnings by assigning a price premium.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Provident Bancorp's revenue growth is expected to slow, with forecast 4.2% increase next year well below the historical 12%p.a. growth over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 2.9% per year. So it's clear that despite the slowdown in growth, Provident Bancorp is still expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, they made no changes to their revenue estimates - and they expect sales to perform better 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.

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 Provident Bancorp going out as far as 2022, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Provident Bancorp that you should be aware of.

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