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Here's What Analysts Are Forecasting For Webster Financial Corporation After Its Annual Results

Simply Wall St

It's been a mediocre week for Webster Financial Corporation (NYSE:WBS) shareholders, with the stock dropping 11% to US$47.10 in the week since its latest full-year results. Results look mixed - while revenue fell marginally short of analyst estimates at US$1.2b, statutory earnings were in line with expectations, at US$4.06 per share. 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 thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Webster Financial

NYSE:WBS Past and Future Earnings, January 28th 2020

Following the latest results, Webster Financial's ten analysts are now forecasting revenues of US$1.24b in 2020. This would be a satisfactory 3.4% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dip 7.9% to US$3.75 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.26b and earnings per share (EPS) of US$3.77 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$53.50. 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. The most optimistic Webster Financial analyst has a price target of US$59.00 per share, while the most pessimistic values it at US$46.50. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Webster Financial's revenue growth is expected to slow, with forecast 3.4% increase next year well below the historical 9.1%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 5.0% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Webster Financial to grow slower than the wider market.

The Bottom Line

The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Webster Financial's revenues are expected to perform worse 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Webster Financial going out to 2021, and you can see them free on our platform here..

You can also view our analysis of Webster Financial's balance sheet, and whether we think Webster Financial is carrying too much debt, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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