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Old National Bancorp (NASDAQ:ONB) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of US$207m, some 5.7% above estimates, and statutory earnings per share (EPS) coming in at US$0.32, 34% ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Old National Bancorp's seven analysts is for revenues of US$808.7m in 2020, which would reflect a reasonable 6.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to decrease 5.7% to US$1.08 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$799.7m and earnings per share (EPS) of US$1.00 in 2020. So the consensus seems to have become somewhat more optimistic on Old National Bancorp's earnings potential following these results.
There's been no major changes to the consensus price target of US$15.25, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's 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. There are some variant perceptions on Old National Bancorp, with the most bullish analyst valuing it at US$16.00 and the most bearish at US$15.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. Next year brings more of the same, according to the analysts, with revenue forecast to grow 6.5%, in line with its 7.3% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 1.9% per year. So although Old National Bancorp is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Old National Bancorp following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$15.25, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Old National Bancorp. Long-term earnings power is much more important than next year's profits. We have forecasts for Old National Bancorp going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Old National Bancorp .
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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