Washington Federal, Inc. (NASDAQ:WAFD) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Statutory revenue and earnings both blasted past expectations, with revenue of US$167m beating expectations by 25% and earnings per share (EPS) reaching US$0.84, some 42% ahead of expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Washington Federal after the latest results.
Taking into account the latest results, the three analysts covering Washington Federal provided consensus estimates of US$535.5m revenue in 2020, which would reflect a noticeable 6.6% decline on its sales over the past 12 months. Statutory earnings per share are expected to dip 7.3% to US$2.60 in the same period. Before this earnings report, analysts had been forecasting revenues of US$538.7m and earnings per share (EPS) of US$2.44 in 2020. So the consensus seems to have become somewhat more optimistic on Washington Federal's earnings potential following these results.
The consensus price target was unchanged at US$36.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Washington Federal at US$38.00 per share, while the most bearish prices it at US$34.00. 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.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that sales are expected to reverse, with the forecast 6.6% revenue decline a notable change from historical growth of 3.9% 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 5.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Washington Federal to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Washington Federal's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$36.00, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Washington Federal going out to 2021, and you can see them free on our platform here..
You can also see whether Washington Federal is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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