Synovus Financial Corp. (NYSE:SNV) just released its latest second-quarter results and things are looking bullish. Statutory revenue and earnings both blasted past expectations, with revenue of US$550m beating expectations by 23% and earnings per share (EPS) reaching US$0.57, some 491% ahead of expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Synovus Financial's twelve analysts are now forecasting revenues of US$1.99b in 2020. This would be a meaningful 20% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to dive 32% to US$1.76 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.85b and earnings per share (EPS) of US$1.15 in 2020. So it seems there's been a definite increase in optimism about Synovus Financial's future following the latest results, with a very substantial lift in the earnings per share forecasts in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$25.06, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Synovus Financial, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$19.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's clear from the latest estimates that Synovus Financial's rate of growth is expected to accelerate meaningfully, with the forecast 20% revenue growth noticeably faster than its historical growth of 12%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Synovus Financial is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Synovus Financial's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Synovus Financial going out to 2022, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Synovus Financial that you need to take into consideration.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.