It's been a good week for Horizon Bancorp, Inc. (NASDAQ:HBNC) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.0% to US$10.85. Revenues were in line with forecasts, at US$53m, although statutory earnings per share came in 13% below what the analysts expected, at US$0.26 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. 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 most recent consensus for Horizon Bancorp from five analysts is for revenues of US$219.0m in 2020 which, if met, would be an okay 7.9% increase on its sales over the past 12 months. Statutory earnings per share are expected to drop 20% to US$1.20 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$209.1m and earnings per share (EPS) of US$1.30 in 2020. So it's pretty clear consensus is mixed on Horizon Bancorp after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
There's been no major changes to the price target of US$14.10, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Horizon Bancorp at US$15.00 per share, while the most bearish prices it at US$13.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Horizon Bancorp's revenue growth is expected to slow, with forecast 7.9% increase next year well below the historical 16%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 2.8% next year. Even after the forecast slowdown in growth, it seems obvious that Horizon Bancorp is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. 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.
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. We have forecasts for Horizon Bancorp going out to 2021, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Horizon Bancorp (of which 1 is concerning!) you should know about.
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