Columbia Banking System, Inc. (NASDAQ:COLB) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$149m, some 5.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.63, 55% 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.
After the latest results, the five analysts covering Columbia Banking System are now predicting revenues of US$546.3m in 2021. If met, this would reflect a satisfactory 7.3% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 5.4% to US$1.87 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$547.9m and earnings per share (EPS) of US$1.76 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$32.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Columbia Banking System analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$30.00. This is a very narrow spread of estimates, implying either that Columbia Banking System is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Columbia Banking System's past performance and to peers in the same industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 7.3%, in line with its 8.2% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 1.1% next year. So although Columbia Banking System 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 Columbia Banking System 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$32.50, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Columbia Banking System analysts - going out to 2022, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Columbia Banking System , and understanding them should be part of your investment process.
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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