- Oops!Something went wrong.Please try again later.
A week ago, Unity Bancorp, Inc. (NASDAQ:UNTY) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of US$18m arriving 3.2% ahead of forecasts. Statutory earnings per share (EPS) were US$0.49, 2.8% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 current consensus from Unity Bancorp's three analysts is for revenues of US$69.8m in 2020, which would reflect an okay 7.6% increase on its sales over the past 12 months. Statutory earnings per share are expected to drop 18% to US$1.75 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$69.2m and earnings per share (EPS) of US$1.86 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 the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$17.67, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Unity Bancorp analyst has a price target of US$21.00 per share, while the most pessimistic values it at US$15.50. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Unity Bancorp's revenue growth is expected to slow, with forecast 7.6% increase next year well below the historical 12%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.9% next year. Even after the forecast slowdown in growth, it seems obvious that Unity Bancorp is also expected 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 Unity Bancorp. 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 held steady at US$17.67, 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 Unity Bancorp 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 2 warning signs for Unity Bancorp that you should be aware of.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.