Central Pacific Financial Corp. (NYSE:CPF) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Central Pacific Financial reported US$56m in revenue, roughly in line with analyst forecasts, although earnings per share (EPS) of US$0.51 beat expectations, being 3.0% higher than what analysts expected. Following the result, 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. With this in mind, we’ve gathered the latest forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the latest consensus from Central Pacific Financial’s four analysts is for revenues of US$228m in 2020, which would reflect a reasonable 4.7% improvement in sales compared to the last 12 months. Earnings per share are forecast to reduce 9.7% to US$1.89 in the same period. Before this earnings report, analysts had been forecasting revenues of US$228m and earnings per share (EPS) of US$1.89 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$30.67, suggesting that the company has met expectations in its recent result. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Central Pacific Financial at US$33.00 per share, while the most bearish prices it at US$29.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s clear from the latest estimates that Central Pacific Financial’s rate of growth is expected to accelerate meaningfully, with forecast 4.7% revenue growth noticeably faster than its historical growth of 2.3%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 2.3% next year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Central Pacific Financial is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$30.67, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Central Pacific Financial going out to 2021, and you can see them free on our platform here..
It might also be worth considering whether Central Pacific Financial’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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