Investors in Signature Bank (NASDAQ:SBNY) had a good week, as its shares rose 5.1% to close at US$146 following the release of its full-year results. It was a credible result overall, with revenues of US$1.3b and statutory earnings per share of US$10.87 both in line with analyst estimates, showing that Signature Bank is executing in line with expectations. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the latest consensus from Signature Bank's 14 analysts is for revenues of US$1.45b in 2020, which would reflect a decent 10% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 3.9% to US$11.38. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.42b and earnings per share (EPS) of US$11.15 in 2020. It looks like there's been a modest increase in sentiment following the latest results, with analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that analysts have increased their price target for Signature Bank 5.8% to US$160 on the back of these upgrades. 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 Signature Bank at US$175 per share, while the most bearish prices it at US$142. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Further, we can compare these estimates to past performance, and see how Signature Bank forecasts compare to the wider market's forecast performance. Analysts are definitely expecting Signature Bank's growth to accelerate, with the forecast 10% growth ranking favourably alongside historical growth of 8.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Signature Bank to grow faster 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 Signature Bank's earnings potential next year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Signature Bank going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Signature Bank's balance sheet, and whether we think Signature Bank is carrying too much debt, for free on our platform here.
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