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Investors in Macatawa Bank Corporation (NASDAQ:MCBC) had a good week, as its shares rose 5.3% to close at US$7.57 following the release of its third-quarter results. It looks like a credible result overall - although revenues of US$21m were what the analysts expected, Macatawa Bank surprised by delivering a (statutory) profit of US$0.21 per share, an impressive 62% above what was forecast. 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.
Taking into account the latest results, Macatawa Bank's two analysts currently expect revenues in 2021 to be US$79.6m, approximately in line with the last 12 months. Statutory earnings per share are expected to crater 28% to US$0.62 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$79.4m and earnings per share (EPS) of US$0.58 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$8.50, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.1%, a significant reduction from annual growth of 5.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.4% next year. It's pretty clear that Macatawa Bank's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Macatawa Bank's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Before you take the next step you should know about the 2 warning signs for Macatawa Bank (1 is a bit concerning!) that we have uncovered.
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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