Financial Institutions, Inc. (NASDAQ:FISI) came out with its yearly results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Financial Institutions missed revenue estimates by 4.3%, with sales of US$162m, although statutory earnings per share (EPS) of US$2.96 beat expectations, coming in 6.9% ahead of analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 most recent consensus for Financial Institutions from three analysts is for revenues of US$177.9m in 2020, which is a notable 9.6% increase on its sales over the past 12 months. Statutory earnings per share are forecast to sink 12% to US$2.60 in the same period. Before this earnings report, analysts had been forecasting revenues of US$177.6m and earnings per share (EPS) of US$2.73 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$35.00, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Financial Institutions analyst has a price target of US$38.00 per share, while the most pessimistic values it at US$33.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Financial Institutions's past performance and to peers in the same market. Analysts are definitely expecting Financial Institutions's growth to accelerate, with the forecast 9.6% growth ranking favourably alongside historical growth of 7.9% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Financial Institutions is expected to grow much faster than its market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Financial Institutions. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$35.00, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Financial Institutions analysts - going out to 2021, and you can see them free on our platform here.
You can also see whether Financial Institutions is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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