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Last week, you might have seen that Cathay General Bancorp (NASDAQ:CATY) released its full-year result to the market. The early response was not positive, with shares down 2.9% to US$36.82 in the past week. Results were roughly in line with estimates, with revenues of US$627m and statutory earnings per share of US$3.48. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, Cathay General Bancorp's six analysts currently expect revenues in 2020 to be US$622.6m, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 4.7% to US$3.33 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$627.0m and earnings per share (EPS) of US$3.33 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.
There were no changes to revenue or earnings estimates or the price target of US$39.17, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Cathay General Bancorp analyst has a price target of US$42.00 per share, while the most pessimistic values it at US$37.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.6% a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.9% next year. It's pretty clear that Cathay General Bancorp's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Cathay General Bancorp going out to 2021, and you can see them free on our platform here..
It might also be worth considering whether Cathay General Bancorp's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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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