A week ago, Silvergate Capital Corporation (NYSE:SI) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 8.2% to hit US$21m. Silvergate Capital also reported a statutory profit of US$0.29, which was an impressive 55% above what the analysts had forecast. 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 dual analysts covering Silvergate Capital provided consensus estimates of US$75.5m revenue in 2020, which would reflect a measurable 6.9% decline on its sales over the past 12 months. Statutory earnings per share are forecast to descend 14% to US$0.95 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$78.4m and earnings per share (EPS) of US$0.78 in 2020. Although the analysts have lowered their sales forecasts, they've also made a considerable lift to their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.
The consensus has made no major changes to the price target of US$18.33, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year.
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. We would also point out that the forecast 6.9% revenue decline is better than the historical trend, which saw revenues shrink 11% annually over the past year
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Silvergate Capital's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings per share are more important to the intrinsic value of the business. 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. We have analyst estimates for Silvergate Capital going out as far as 2022, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Silvergate Capital you should be aware of, and 1 of them is a bit concerning.
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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