Results: Western New England Bancorp, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

A week ago, Western New England Bancorp, Inc. (NASDAQ:WNEB) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$18m, some 4.3% above estimates, and statutory earnings per share (EPS) coming in at US$0.24, 43% ahead of expectations. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Western New England Bancorp

Taking into account the latest results, the three analysts covering Western New England Bancorp provided consensus estimates of US$69.0m revenue in 2021, which would reflect a noticeable 3.9% decline on its sales over the past 12 months. Statutory per-share earnings are expected to be US$0.61, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$68.5m and earnings per share (EPS) of US$0.61 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$9.13, showing that the business is executing well and in line with expectations. 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. Currently, the most bullish analyst values Western New England Bancorp at US$10.00 per share, while the most bearish prices it at US$8.00. This is a very narrow spread of estimates, implying either that Western New England Bancorp is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.2% by the end of 2021. This indicates a significant reduction from annual growth of 9.1% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 4.7% per year.

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 made no major changes to their revenue forecasts for next year, with sales expected to grow in line with the wider industry. The consensus price target held steady at US$9.13, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Western New England Bancorp. Long-term earnings power is much more important than next year's profits. We have forecasts for Western New England Bancorp going out to 2022, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Western New England Bancorp (at least 1 which is concerning) , and understanding them should be part of your investment process.

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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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