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Community Bank System, Inc. Just Recorded A 16% EPS Beat: Here's What Analysts Are Forecasting Next

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Simply Wall St
·4 min read
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Community Bank System, Inc. (NYSE:CBU) shareholders are probably feeling a little disappointed, since its shares fell 5.3% to US$56.22 in the week after its latest quarterly results. Revenues were US$153m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.79 were also better than expected, beating analyst predictions by 16%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Community Bank System

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earnings-and-revenue-growth

After the latest results, the six analysts covering Community Bank System are now predicting revenues of US$610.4m in 2021. If met, this would reflect a modest 6.0% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$3.02, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$607.1m and earnings per share (EPS) of US$2.80 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$61.70, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Community Bank System analyst has a price target of US$67.50 per share, while the most pessimistic values it at US$56.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Community Bank System is an easy business to forecast or the the analysts are all using similar assumptions.

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. It's pretty clear that there is an expectation that Community Bank System's revenue growth will slow down substantially, with revenues next year expected to grow 6.0%, compared to a historical growth rate of 10% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.3% next year. Even after the forecast slowdown in growth, it seems obvious that Community Bank System is also expected 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 Community Bank System's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Community Bank System 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 1 warning sign for Community Bank System 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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