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Analyst Estimates: Here's What Brokers Think Of National Australia Bank Limited (ASX:NAB) After Its Half-Yearly Report

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·3-min read
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Last week, you might have seen that National Australia Bank Limited (ASX:NAB) released its half-yearly result to the market. The early response was not positive, with shares down 3.1% to AU$31.62 in the past week. It was a credible result overall, with revenues of AU$8.8b and statutory earnings per share of AU$1.05 both in line with analyst estimates, showing that National Australia Bank is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for National Australia Bank

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Following the latest results, National Australia Bank's 14 analysts are now forecasting revenues of AU$18.1b in 2022. This would be a credible 2.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dip 3.4% to AU$2.05 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$17.9b and earnings per share (EPS) of AU$1.98 in 2022. So the consensus seems to have become somewhat more optimistic on National Australia Bank's earnings potential following these results.

There's been no major changes to the consensus price target of AU$32.89, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values National Australia Bank at AU$35.40 per share, while the most bearish prices it at AU$28.17. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the National Australia Bank's past performance and to peers in the same industry. For example, we noticed that National Australia Bank's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 5.4% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 2.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.4% annually. So it looks like National Australia Bank is expected to grow faster than its competitors, at least for a while.

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 National Australia Bank following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at AU$32.89, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for National Australia Bank going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for National Australia Bank (1 is significant!) that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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