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Earnings Miss: Wintrust Financial Corporation Missed EPS By 46% And Analysts Are Revising Their Forecasts

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·3 min read
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Investors in Wintrust Financial Corporation (NASDAQ:WTFC) had a good week, as its shares rose 7.0% to close at US$44.66 following the release of its second-quarter results. Statutory earnings per share disappointed, coming in -46% short of expectations, at US$0.34. Fortunately revenue performance was a lot stronger, with revenues of US$426m arriving 18% ahead of predictions. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Wintrust Financial

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Wintrust Financial's eleven analysts is for revenues of US$1.59b in 2020, which would reflect a decent 18% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to decline 14% to US$3.90 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.55b and earnings per share (EPS) of US$3.88 in 2020. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a slight bump in to revenue forecasts.

Even though revenue forecasts increased, there was no change to the consensus price target of US$49.67, suggesting the analysts are focused on earnings as the driver of value creation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Wintrust Financial at US$60.00 per share, while the most bearish prices it at US$35.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Wintrust Financial shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Wintrust Financial's growth to accelerate, with the forecast 18% growth ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.0% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Wintrust Financial is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$49.67, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Wintrust Financial analysts - going out to 2022, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Wintrust Financial you should be aware of.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.