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Macatawa Bank Corporation (NASDAQ:MCBC) investors will be delighted, with the company turning in some strong numbers with its latest results. Results were good overall, with revenues beating analyst predictions by 4.0% to hit US$20m. Statutory earnings per share (EPS) came in at US$0.19, some 8.6% above whatthe analysts had expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 dual analysts covering Macatawa Bank are now predicting revenues of US$85.0m in 2020. If met, this would reflect an okay 2.9% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 29% to US$0.64 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$77.7m and earnings per share (EPS) of US$0.64 in 2020. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.
Even though revenue forecasts increased, the consensus price target 26% to US$8.25, perhaps suggesting thatthe analysts have become more pessimistic about the lack of earnings growth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Macatawa Bank's revenue growth is expected to slow, with forecast 2.9% increase next year well below the historical 6.1%p.a. growth over the last five years. Compare this to the 758 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 2.9% per year. Factoring in the forecast slowdown in growth, it looks like Macatawa Bank is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Macatawa Bank's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Macatawa Bank going out as far as 2021, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Macatawa Bank (including 1 which is concerning) .
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