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It's shaping up to be a tough period for Investar Holding Corporation (NASDAQ:ISTR), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with US$18m revenue coming in 2.6% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$0.05 missed the mark badly, arriving some 87% below what was expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Investar Holding's five analysts are now forecasting revenues of US$80.6m in 2020. This would be a solid 19% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to nosedive 26% to US$0.96 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$80.2m and earnings per share (EPS) of US$1.63 in 2020. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
The average price target fell 11% to US$14.80, with reduced earnings forecasts clearly tied to a lower valuation estimate. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Investar Holding, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$13.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. The analysts are definitely expecting Investar Holding'sgrowth to accelerate, with the forecast 19% growth ranking favourably alongside historical growth of 16% 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 2.9% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Investar Holding is expected to grow much faster than its 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. 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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 Investar Holding going out to 2021, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Investar Holding that we have uncovered.
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