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It's been a good week for The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.8% to US$26.79. Revenues were US$121m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.67, an impressive 30% ahead of estimates. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the recent earnings report, the consensus from five analysts covering Bank of N.T. Butterfield & Son is for revenues of US$500.1m in 2020, implying a measurable 3.0% decline in sales compared to the last 12 months. Statutory earnings per share are expected to descend 10% to US$2.77 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$502.0m and earnings per share (EPS) of US$2.57 in 2020. So the consensus seems to have become somewhat more optimistic on Bank of N.T. Butterfield & Son's earnings potential following these results.
The consensus price target was unchanged at US$28.67, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Bank of N.T. Butterfield & Son at US$34.00 per share, while the most bearish prices it at US$25.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 3.0% revenue decline a notable change from historical growth of 8.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Bank of N.T. Butterfield & Son is expected to lag the wider industry.
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 Bank of N.T. Butterfield & Son following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Bank of N.T. Butterfield & Son analysts - going out to 2022, and you can see them free on our platform here.
Even so, be aware that Bank of N.T. Butterfield & Son is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...
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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