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It's been a good week for First Financial Corporation (NASDAQ:THFF) shareholders, because the company has just released its latest yearly results, and the shares gained 3.2% to US$43.05. Results were roughly in line with estimates, with revenues of US$165m and statutory earnings per share of US$3.80. Following the result, 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following the latest results, First Financial's three analysts are now forecasting revenues of US$192.7m in 2020. This would be a meaningful 16% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$3.78, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$186.3m and earnings per share (EPS) of US$3.77 in 2020. There doesn't appear to have been a major change in analyst sentiment following the results, other than the slight bump in revenue estimates.
Even though revenue forecasts increased, there was no change to the consensus price target of US$47.00, suggesting analysts are focused on earnings as the driver of value creation. 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. Currently, the most bullish analyst values First Financial at US$48.00 per share, while the most bearish prices it at US$46.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Analysts are definitely expecting First Financial's growth to accelerate, with the forecast 16% growth ranking favourably alongside historical growth of 2.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that First Financial is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. 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 First Financial. Long-term earnings power is much more important than next year's profits. We have forecasts for First Financial going out to 2021, and you can see them free on our platform here.
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