Today is shaping up negative for Salisbury Bancorp, Inc. (NASDAQ:SAL) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the current consensus, from the twin analysts covering Salisbury Bancorp, is for revenues of US$38m in 2020, which would reflect a considerable 9.6% reduction in Salisbury Bancorp's sales over the past 12 months. Statutory earnings per share are supposed to dive 21% to US$3.02 in the same period. Before this latest update, the analysts had been forecasting revenues of US$42m and earnings per share (EPS) of US$3.07 in 2020. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.
the analysts have also increased their price target 11% to US$40.50, clearly signalling that lower revenue forecasts this year are not expected to have a material impact on Salisbury Bancorp's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Salisbury Bancorp analyst has a price target of US$43.00 per share, while the most pessimistic values it at US$38.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 9.6% revenue decline a notable change from historical growth of 4.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.5% annually for the foreseeable future. It's pretty clear that Salisbury Bancorp's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Salisbury Bancorp going forwards.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Salisbury Bancorp going out as far as 2021, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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