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A week ago, Evans Bancorp, Inc. (NYSEMKT:EVBN) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 3.2% to hit US$21m. Evans Bancorp also reported a statutory profit of US$0.84, which was an impressive 28% above what the analysts had forecast. Following the result, the 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the two analysts covering Evans Bancorp are now predicting revenues of US$82.4m in 2021. If met, this would reflect a huge 24% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 88% to US$3.30. In the lead-up to this report, the analysts had been modelling revenues of US$82.6m and earnings per share (EPS) of US$3.14 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$30.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders.
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. The analysts are definitely expecting Evans Bancorp's growth to accelerate, with the forecast 24% 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 1.2% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Evans Bancorp to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Evans Bancorp's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Evans Bancorp. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for Evans Bancorp that 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.
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