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Last week, you might have seen that Central Valley Community Bancorp (NASDAQ:CVCY) released its annual result to the market. The early response was not positive, with shares down 4.7% to US$15.30 in the past week. Revenues were US$75m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.62 were also better than expected, beating analyst predictions by 13%. Following the result, the 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Central Valley Community Bancorp from five analysts is for revenues of US$77.8m in 2021 which, if met, would be a satisfactory 3.8% increase on its sales over the past 12 months. Statutory earnings per share are predicted to rise 3.9% to US$1.69. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$73.0m and earnings per share (EPS) of US$1.30 in 2021. So it seems there's been a definite increase in optimism about Central Valley Community Bancorp's future following the latest results, with a massive increase in the earnings per share forecasts in particular.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 7.4% to US$18.13per share. 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 Central Valley Community Bancorp, with the most bullish analyst valuing it at US$19.00 and the most bearish at US$17.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Central Valley Community Bancorp's revenue growth is expected to slow, with forecast 3.8% increase next year well below the historical 7.3%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that Central Valley Community Bancorp is also expected to grow slower than other industry participants.
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 Central Valley Community Bancorp following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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 Central Valley Community Bancorp analysts - going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Central Valley Community Bancorp (1 makes us a bit uncomfortable!) that we have uncovered.
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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