Yahoo Finance Signature Bank Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
Investors in Signature Bank (NASDAQ:SBNY) had a good week, as its shares rose 5.6% to close at US$94.12 following the release of its quarterly results. Sales of US$362m surpassed estimates by 5.5%, although statutory earnings per share missed badly, coming in 21% below expectations at US$1.88 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Signature Bank after the latest results.
View our latest analysis for Signature Bank
Taking into account the latest results, the current consensus from Signature Bank's 16 analysts is for revenues of US$1.53b in 2020, which would reflect a solid 13% increase on its sales over the past 12 months. Statutory earnings per share are expected to dip 9.4% to US$9.22 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.40b and earnings per share (EPS) of US$9.56 in 2020. So it's pretty clear consensus is mixed on Signature Bank after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
There's been no major changes to the price target of US$111, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' 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 Signature Bank at US$155 per share, while the most bearish prices it at US$91.00. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Signature Bank'sgrowth to accelerate, with the forecast 13% growth ranking favourably alongside historical growth of 8.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Signature Bank is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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 Signature Bank analysts - going out to 2022, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Signature Bank that you should be aware of.
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.
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