Heartland Financial USA, Inc. (NASDAQ:HTLF) just released its second-quarter report and things are looking bullish. Heartland Financial USA delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$155m, some 14% above indicated. Statutory EPS were US$0.82, an impressive 83% ahead of forecasts. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Heartland Financial USA after the latest results.
After the latest results, the five analysts covering Heartland Financial USA are now predicting revenues of US$602.9m in 2020. If met, this would reflect a notable 20% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dip 6.2% to US$3.12 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$589.3m and earnings per share (EPS) of US$2.51 in 2020. So it seems there's been a definite increase in optimism about Heartland Financial USA's future following the latest results, with a great increase in the earnings per share forecasts in particular.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$36.25, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Heartland Financial USA, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$32.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Heartland Financial USA is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Heartland Financial USA's rate of growth is expected to accelerate meaningfully, with the forecast 20% revenue growth noticeably faster than its historical growth of 12%p.a. 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 1.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Heartland Financial USA is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Heartland Financial USA following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$36.25, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Heartland Financial USA. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Heartland Financial USA analysts - going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Heartland Financial USA 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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