Shareholders might have noticed that New York Community Bancorp, Inc. (NYSE:NYCB) filed its third-quarter result this time last week. The early response was not positive, with shares down 6.6% to US$8.19 in the past week. It was a credible result overall, with revenues of US$296m and statutory earnings per share of US$0.23 both in line with analyst estimates, showing that New York Community Bancorp is executing in line with expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on New York Community Bancorp after the latest results.
Taking into account the latest results, the current consensus from New York Community Bancorp's 13 analysts is for revenues of US$1.31b in 2021, which would reflect a huge 26% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 28% to US$1.06. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.31b and earnings per share (EPS) of US$1.04 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$11.27, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on New York Community Bancorp, with the most bullish analyst valuing it at US$14.00 and the most bearish at US$9.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting New York Community Bancorp's growth to accelerate, with the forecast 26% growth ranking favourably alongside historical growth of 1.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 7.1% per year. So it's clear with the acceleration in growth, New York Community Bancorp is expected to grow meaningfully faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards New York Community Bancorp following these results. Fortunately, they also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations. Their estimates also suggest that New York Community Bancorp's revenues are expected to perform better 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.
With that in mind, we wouldn't be too quick to come to a conclusion on New York Community Bancorp. Long-term earnings power is much more important than next year's profits. We have forecasts for New York Community Bancorp going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for New York Community Bancorp that you need to take into consideration.
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