Earnings Beat: Kearny Financial Corp. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Last week saw the newest quarterly earnings release from Kearny Financial Corp. (NASDAQ:KRNY), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$54m were in line with what the analysts predicted, Kearny Financial surprised by delivering a statutory profit of US$0.25 per share, modestly greater than expected. 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 Kearny Financial
Taking into account the latest results, the most recent consensus for Kearny Financial from two analysts is for revenues of US$218.1m in 2023 which, if met, would be an okay 2.4% increase on its sales over the past 12 months. Statutory earnings per share are forecast to decline 18% to US$0.83 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$218.1m and earnings per share (EPS) of US$0.94 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
The average price target fell 7.9% to US$11.67, with reduced earnings forecasts clearly tied to a lower valuation estimate.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Kearny Financial's revenue growth is expected to slow, with the forecast 3.2% annualised growth rate until the end of 2023 being well below the historical 13% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that Kearny Financial is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment 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. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Kearny Financial's future valuation.
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. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Kearny Financial (including 1 which makes us a bit uncomfortable) .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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