Results: Merchants Bancorp Beat Earnings Expectations And Analysts Now Have New Forecasts

It's been a good week for Merchants Bancorp (NASDAQ:MBIN) shareholders, because the company has just released its latest yearly results, and the shares gained 7.5% to US$41.93. Revenues were US$646m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$6.30 were also better than expected, beating analyst predictions by 11%. 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 Merchants Bancorp after the latest results.

See our latest analysis for Merchants Bancorp

Taking into account the latest results, the most recent consensus for Merchants Bancorp from three analysts is for revenues of US$693.7m in 2025. If met, it would imply a satisfactory 7.3% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to descend 10% to US$5.56 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$655.2m and earnings per share (EPS) of US$4.91 in 2025. So it seems there's been a definite increase in optimism about Merchants Bancorp's future following the latest results, with a nice gain to the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of US$52.17, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. There are some variant perceptions on Merchants Bancorp, with the most bullish analyst valuing it at US$56.50 and the most bearish at US$47.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Merchants Bancorp's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 7.3% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.7% annually. Even after the forecast slowdown in growth, it seems obvious that Merchants Bancorp is also expected to grow faster 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 Merchants Bancorp's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 Merchants Bancorp. Long-term earnings power is much more important than next year's profits. We have forecasts for Merchants Bancorp going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Merchants Bancorp that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.