First Community Corporation (NASDAQ:FCCO) just released its latest second-quarter results and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of US$13m, some 5.7% above estimates, and statutory earnings per share (EPS) coming in at US$0.30, 47% ahead of expectations. 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.
Taking into account the latest results, the most recent consensus for First Community from five analysts is for revenues of US$52.2m in 2020 which, if met, would be a meaningful 8.3% increase on its sales over the past 12 months. Statutory earnings per share are forecast to drop 18% to US$1.07 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$50.5m and earnings per share (EPS) of US$1.03 in 2020. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Despite these upgrades,the analysts have not made any major changes to their price target of US$16.63, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on First Community, with the most bullish analyst valuing it at US$17.50 and the most bearish at US$15.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 8.3%, in line with its 9.5% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 1.9% per year. So it's pretty clear that First Community is forecast to grow substantially faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around First Community's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$16.63, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for First Community going out to 2021, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for First Community 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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