Investors in Howard Bancorp, Inc. (NASDAQ:HBMD) had a good week, as its shares rose 4.9% to close at US$17.63 following the release of its full-year results. Results look mixed - while revenue fell marginally short of analyst estimates at US$86m, statutory earnings beat expectations 6.6%, with Howard Bancorp reporting profits of US$0.89 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus, from the four analysts covering Howard Bancorp, is for revenues of US$81.6m in 2020, which would reflect a perceptible 5.3% reduction in Howard Bancorp's sales over the past 12 months. Statutory earnings per share are expected to ascend 17% to US$1.03. In the lead-up to this report, analysts had been modelling revenues of US$89.9m and earnings per share (EPS) of US$1.03 in 2020. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The average price target was steady at US$17.17 even though revenue estimates declined; likely suggesting analysts place a higher value on earnings. 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. There are some variant perceptions on Howard Bancorp, with the most bullish analyst valuing it at US$17.50 and the most bearish at US$17.00 per share. 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 Howard Bancorp's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that sales are expected to reverse, with the forecast 5.3% revenue decline a notable change from historical growth of 22% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 4.9% next year. It's pretty clear that Howard Bancorp's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Howard Bancorp going out to 2021, and you can see them free on our platform here..
You can also see whether Howard Bancorp is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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