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First Financial Corporation (NASDAQ:THFF) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$45m, statutory earnings beat expectations by a notable 39%, coming in at US$0.89 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, First Financial's three analysts are now forecasting revenues of US$186.4m in 2020. This would be a modest 8.0% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to crater 29% to US$2.76 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$186.0m and earnings per share (EPS) of US$2.87 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target fell 14% to US$40.00, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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. The most optimistic First Financial analyst has a price target of US$42.00 per share, while the most pessimistic values it at US$38.00. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that First Financial is an easy business to forecast or that the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting First Financial'sgrowth to accelerate, with the forecast 8.0% growth ranking favourably alongside historical growth of 3.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.8% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect First Financial to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for First Financial. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of First Financial's future valuation.
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. At Simply Wall St, we have a full range of analyst estimates for First Financial going out to 2021, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 3 warning signs for First Financial you should be aware of, and 1 of them can't be ignored.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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