First Financial Bankshares, Inc. (NASDAQ:FFIN) investors will be delighted, with the company turning in some strong numbers with its latest results. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 14% higher than the analysts had forecast, at US$128m, while EPS were US$0.38 beating analyst models by 48%. 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. 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 First Financial Bankshares' five analysts is for revenues of US$487.8m in 2020, which would reflect a solid 16% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 5.1% to US$1.33. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$455.5m and earnings per share (EPS) of US$1.11 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$26.60, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic First Financial Bankshares analyst has a price target of US$29.00 per share, while the most pessimistic values it at US$25.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting First Financial Bankshares' growth to accelerate, with the forecast 16% growth ranking favourably alongside historical growth of 8.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.0% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect First Financial Bankshares 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 First Financial Bankshares' 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple First Financial Bankshares 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 3 warning signs for First Financial Bankshares (1 doesn't sit too well with us!) 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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