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Investors in Brookline Bancorp, Inc. (NASDAQ:BRKL) had a good week, as its shares rose 4.8% to close at US$9.96 following the release of its quarterly results. It looks like a credible result overall - although revenues of US$71m were what the analysts expected, Brookline Bancorp surprised by delivering a (statutory) profit of US$0.25 per share, an impressive 51% above what was forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Brookline Bancorp's six analysts are now forecasting revenues of US$280.9m in 2020. This would be a sizeable 27% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to decrease 8.9% to US$0.54 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$284.2m and earnings per share (EPS) of US$0.37 in 2020. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.
There's been no major changes to the consensus price target of US$11.60, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. There are some variant perceptions on Brookline Bancorp, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$11.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Brookline Bancorp's past performance and to peers in the same industry. The analysts are definitely expecting Brookline Bancorp's growth to accelerate, with the forecast 27% growth ranking favourably alongside historical growth of 5.3% 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 1.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Brookline Bancorp to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Brookline Bancorp's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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 forecasts for Brookline Bancorp going out to 2022, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Brookline Bancorp you should be aware of.
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. 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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