First Foundation Inc. (NASDAQ:FFWM) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. The result was positive overall - although revenues of US$245m were in line with what the analysts predicted, First Foundation surprised by delivering a statutory profit of US$1.88 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, First Foundation's five analysts are now forecasting revenues of US$266.0m in 2021. This would be a solid 8.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 6.9% to US$2.02. Before this earnings report, the analysts had been forecasting revenues of US$255.4m and earnings per share (EPS) of US$1.81 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice gain to earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for First Foundation 12% to US$25.20on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic First Foundation analyst has a price target of US$26.00 per share, while the most pessimistic values it at US$24.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that First Foundation's revenue growth will slow down substantially, with revenues next year expected to grow 8.8%, compared to a historical growth rate of 19% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.3% next year. So it's pretty clear that, while First Foundation's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
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 First Foundation following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
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. We have forecasts for First Foundation going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with First Foundation .
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