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Sandy Spring Bancorp, Inc. (NASDAQ:SASR) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues missed analyst forecasts badly, coming in 28% below estimates at US$327m. Equally surprising was the fact that statutory earnings per share of US$2.18 beat analyst estimates by 18%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Sandy Spring Bancorp from five analysts is for revenues of US$474.4m in 2021 which, if met, would be a sizeable 45% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 111% to US$3.54. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$474.4m and earnings per share (EPS) of US$3.34 in 2021. So the consensus seems to have become somewhat more optimistic on Sandy Spring Bancorp's earnings potential following these results.
There's been no major changes to the consensus price target of US$37.25, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Sandy Spring Bancorp, with the most bullish analyst valuing it at US$38.00 and the most bearish at US$34.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sandy Spring Bancorp is an easy business to forecast or the the analysts are all using similar assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Sandy Spring Bancorp's growth to accelerate, with the forecast 45% growth ranking favourably alongside historical growth of 14% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sandy Spring Bancorp is expected to grow much faster than its 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 Sandy Spring Bancorp following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Sandy Spring Bancorp. Long-term earnings power is much more important than next year's profits. We have forecasts for Sandy Spring Bancorp going out to 2024, 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 4 warning signs with Sandy Spring Bancorp , and understanding these 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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