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Allegiance Bancshares, Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models

It's been a good week for Allegiance Bancshares, Inc. (NASDAQ:ABTX) shareholders, because the company has just released its latest first-quarter results, and the shares gained 7.9% to US$24.48. It was not a great result overall. Although revenues beat expectations, hitting US$48m, statutory earnings missed analyst forecasts by 11%, coming in at just US$0.17 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Allegiance Bancshares

NasdaqGM:ABTX Past and Future Earnings May 3rd 2020
NasdaqGM:ABTX Past and Future Earnings May 3rd 2020

After the latest results, the four analysts covering Allegiance Bancshares are now predicting revenues of US$222.7m in 2020. If met, this would reflect a substantial 26% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to accumulate 7.0% to US$2.25. In the lead-up to this report, the analysts had been modelling revenues of US$183.0m and earnings per share (EPS) of US$1.64 in 2020. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.

Despite these upgrades, the consensus price target fell 11% to US$28.67, perhaps signalling that the uplift in performance is not expected to last. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Allegiance Bancshares at US$32.00 per share, while the most bearish prices it at US$27.00. This is a very narrow spread of estimates, implying either that Allegiance Bancshares is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Allegiance Bancshares'historical trends, as next year's 26% revenue growth is roughly in line with 22% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.8% per year. So it's pretty clear that Allegiance Bancshares is forecast to grow substantially faster than its industry.

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 Allegiance Bancshares following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Allegiance Bancshares going out to 2021, and you can see them free on our platform here..

It is also worth noting that we have found 3 warning signs for Allegiance Bancshares (1 is significant!) that you need to take into consideration.

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.

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