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Park National Corporation Just Recorded A 33% EPS Beat: Here's What Analysts Are Forecasting Next

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Simply Wall St
·4 min read
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As you might know, Park National Corporation (NYSEMKT:PRK) just kicked off its latest second-quarter results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$112m, some 8.8% above estimates, and statutory earnings per share (EPS) coming in at US$1.80, 33% 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Park National after the latest results.

See our latest analysis for Park National

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Taking into account the latest results, the most recent consensus for Park National from three analysts is for revenues of US$429.4m in 2020 which, if met, would be a modest 7.9% increase on its sales over the past 12 months. Statutory earnings per share are forecast to sink 11% to US$5.84 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$413.4m and earnings per share (EPS) of US$5.53 in 2020. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

As a result, it might be a surprise to see thatthe analysts have cut their price target 6.0% to US$79.00, which could suggest the forecast improvement in performance is not expected to last. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Park National at US$85.00 per share, while the most bearish prices it at US$75.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Park National is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Park National's past performance and to peers in the same industry. It's clear from the latest estimates that Park National's rate of growth is expected to accelerate meaningfully, with the forecast 7.9% revenue growth noticeably faster than its historical growth of 5.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Park National is expected to grow much faster than its 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 Park National following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Park National. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Park National analysts - 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 Park National .

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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