The most recent earnings release Signature Bank’s (NASDAQ:SBNY) announced in December 2018 indicated that the company experienced a strong tailwind, eventuating to a double-digit earnings growth of 31%. Today I want to provide a brief commentary on how market analysts perceive Signature Bank’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for the upcoming year seems buoyant, with earnings climbing by a robust 23%. This growth seems to continue into the following year with rates reaching double digit 30% compared to today’s earnings, and finally hitting US$715m by 2022.
Although it’s helpful to be aware of the rate of growth year by year relative to today’s value, it may be more valuable to evaluate the rate at which the earnings are growing every year, on average. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Signature Bank’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 12%. This means, we can expect Signature Bank will grow its earnings by 12% every year for the next few years.
For Signature Bank, I’ve put together three relevant aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is SBNY worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SBNY is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SBNY? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.