Allegiance Bancshares, Inc. (NASDAQ:ABTX) came out with its yearly results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Revenues came in 2.5% below expectations, at US$187m. Statutory earnings per share were relatively better off, with a per-share profit of US$2.47 being roughly in line with analyst estimates. Following the result, 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Allegiance Bancshares after the latest results.
Taking into account the latest results, the current consensus from Allegiance Bancshares's three analysts is for revenues of US$192.0m in 2020, which would reflect a reasonable 2.6% increase on its sales over the past 12 months. Statutory earnings per share are expected to reduce 3.6% to US$2.41 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$192.6m and earnings per share (EPS) of US$2.49 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$38.67, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Allegiance Bancshares at US$41.00 per share, while the most bearish prices it at US$37.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It's pretty clear that analysts expect Allegiance Bancshares's revenue growth will slow down substantially, with revenues next year expected to grow 2.6%, compared to a historical growth rate of 23% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 5.0% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Allegiance Bancshares to grow slower than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Allegiance Bancshares. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$38.67, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Allegiance Bancshares. Long-term earnings power is much more important than next year's profits. 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..
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