City Holding Company (NASDAQ:CHCO) shares fell 3.7% to US$75.68 in the week since its latest yearly results. City Holding reported in line with analyst predictions, delivering revenues of US$231m and statutory earnings per share of US$5.42, suggesting the business is executing well and in line with its plan. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on City Holding after the latest results.
Taking into account the latest results, City Holding's five analysts currently expect revenues in 2020 to be US$227.5m, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$5.48, roughly flat on the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$231.4m and earnings per share (EPS) of US$5.20 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$78.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values City Holding at US$82.00 per share, while the most bearish prices it at US$71.00. 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.
In addition, we can look to City Holding's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.6% a significant reduction from annual growth of 6.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 5.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect City Holding to grow slower than the wider market.
The Bottom Line
The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards City Holding following these results. 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple City Holding analysts - going out to 2021, and you can see them free on our platform here.
You can also see whether City Holding is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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