Sandy Spring Bancorp, Inc. (NASDAQ:SASR) shares fell 4.3% to US$35.34 in the week since its latest full-year results. Results look mixed - while revenue fell marginally short of analyst estimates at US$331m, statutory earnings were in line with expectations, at US$3.25 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top 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 analysts have changed their earnings models, following these results.
Following the latest results, Sandy Spring Bancorp's three analysts are now forecasting revenues of US$418.4m in 2020. This would be a major 26% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$3.30, approximately in line with the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$429.3m and earnings per share (EPS) of US$3.23 in 2020. If anything, analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.
There's been no real change to the average price target of US$38.83, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Sandy Spring Bancorp, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$38.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. Analysts are definitely expecting Sandy Spring Bancorp's growth to accelerate, with the forecast 26% growth ranking favourably alongside historical growth of 15% per annum over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 5.0% next year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect Sandy Spring Bancorp to grow faster than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Sandy Spring Bancorp's earnings potential next year. Unfortunately analysts also downgraded their revenue estimates, although industry data suggests that Sandy Spring Bancorp's revenues are expected to grow faster than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$38.83, with the latest estimates not enough to have an impact on analysts' estimated valuations.
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.
You can also see whether Sandy Spring Bancorp is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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