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First Financial Bankshares, Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models

Investors in First Financial Bankshares, Inc. (NASDAQ:FFIN) had a good week, as its shares rose 8.9% to close at US$27.60 following the release of its first-quarter results. It looks like the results were a bit of a negative overall. While revenues of US$110m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.5% to hit US$0.26 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for First Financial Bankshares

NasdaqGS:FFIN Past and Future Earnings April 28th 2020
NasdaqGS:FFIN Past and Future Earnings April 28th 2020

Following the latest results, First Financial Bankshares' five analysts are now forecasting revenues of US$445.3m in 2020. This would be a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to reduce 7.0% to US$1.11 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$436.8m and earnings per share (EPS) of US$1.11 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

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The analysts reconfirmed their price target of US$25.60, showing that the business is executing well and in line with expectations. 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. There are some variant perceptions on First Financial Bankshares, with the most bullish analyst valuing it at US$28.00 and the most bearish at US$22.00 per share. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that First Financial Bankshares is an easy business to forecast or that the the analysts are all using similar assumptions.

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 First Financial Bankshares'growth to accelerate, with the forecast 11% growth ranking favourably alongside historical growth of 8.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.9% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect First Financial Bankshares to grow faster 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. Happily, there were no major changes to revenue forecasts, with the business still 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple First Financial Bankshares analysts - going out to 2021, 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 First Financial Bankshares you should be aware of, and 1 of them makes us a bit uncomfortable.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.