As you might know, CVB Financial Corp. (NASDAQ:CVBF) just kicked off its latest quarterly results with some very strong numbers. CVB Financial beat earnings, with revenues hitting US$117m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 17%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from CVB Financial's six analysts is for revenues of US$480.5m in 2020, which would reflect a credible 7.9% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 3.3% to US$1.26 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$460.4m and earnings per share (EPS) of US$1.15 in 2020. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Despite these upgrades,the analysts have not made any major changes to their price target of US$20.10, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. The most optimistic CVB Financial analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$19.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that CVB Financial's revenue growth will slow down substantially, with revenues next year expected to grow 7.9%, compared to a historical growth rate of 12% 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) 2.0% next year. So it's pretty clear that, while CVB Financial's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CVB Financial's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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.
With that in mind, we wouldn't be too quick to come to a conclusion on CVB Financial. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for CVB Financial going out to 2022, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 1 warning sign for CVB Financial that you need to be mindful 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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