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After Pinnacle Financial Partners, Inc.’s (NASDAQ:PNFP) earnings announcement on 31 December 2018, analysts seem cautiously bearish, with earnings expected to grow by 8.7% in the upcoming year relative to the higher past 5-year average growth rate of 35%. Presently, with latest-twelve-month earnings at US$359m, we should see this growing to US$391m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Pinnacle Financial Partners in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The 8 analysts covering PNFP view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To get an idea of the overall earnings growth trend for PNFP, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$359m and the final forecast of US$453m by 2022, the annual rate of growth for PNFP’s earnings is 7.1%. This leads to an EPS of $5.89 in the final year of projections relative to the current EPS of $4.66. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 40% to 36% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Pinnacle Financial Partners, there are three key aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Pinnacle Financial Partners worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Pinnacle Financial Partners is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Pinnacle Financial Partners? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.