Esquire Financial Holdings, Inc. (NASDAQ:ESQ) shareholders are probably feeling a little disappointed, since its shares fell 2.7% to US$14.99 in the week after its latest quarterly results. Statutory earnings per share fell badly short of expectations, coming in at US$0.33, some 31% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$9.2m. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the solitary analyst covering Esquire Financial Holdings provided consensus estimates of US$39.0m revenue in 2020, which would reflect a considerable 13% decline on its sales over the past 12 months. Statutory earnings per share are expected to reduce 6.1% to US$1.75 in the same period. In the lead-up to this report, the analyst had been modelling revenues of US$37.8m and earnings per share (EPS) of US$2.00 in 2020. So it's pretty clear the analyst has mixed opinions on Esquire Financial Holdings after the latest results; even though they upped their revenue numbers, it came at the cost of a real cut to per-share earnings expectations.
The analyst also cut Esquire Financial Holdings' price target 31% to US$18.00, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 13% revenue decline a notable change from historical growth of 28% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Esquire Financial Holdings is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Esquire Financial Holdings. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Esquire Financial Holdings you should be aware of.
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