Last week, you might have seen that TowneBank (NASDAQ:TOWN) released its yearly result to the market. The early response was not positive, with shares down 2.5% to US$31.12 in the past week. It was a workmanlike result, with revenues of US$697m coming in 2.7% ahead of expectations, and statutory earnings per share of US$2.97, in line with analyst appraisals. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on TowneBank after the latest results.
Taking into account the latest results, the current consensus, from the four analysts covering TowneBank, is for revenues of US$645.8m in 2022, which would reflect a perceptible 7.4% reduction in TowneBank's sales over the past 12 months. Statutory earnings per share are expected to dive 22% to US$2.34 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$645.8m and earnings per share (EPS) of US$2.34 in 2022. 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.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$35.50. 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 TowneBank, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$35.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting TowneBank is an easy business to forecast or the the analysts are all using similar assumptions.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 7.4% by the end of 2022. This indicates a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.8% per year. It's pretty clear that TowneBank's revenues are expected to perform substantially worse 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, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for TowneBank going out to 2023, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for TowneBank you should be aware of, and 1 of them is a bit concerning.
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