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It's been a good week for South Plains Financial, Inc. (NASDAQ:SPFI) shareholders, because the company has just released its latest first-quarter results, and the shares gained 2.3% to US$12.79. South Plains Financial beat revenue forecasts by a solid 11% to hit US$49m. Statutory earnings per share came in at US$0.38, in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, South Plains Financial's two analysts are now forecasting revenues of US$186.9m in 2020. This would be a notable 13% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to plunge 31% to US$1.23 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$180.0m and earnings per share (EPS) of US$1.26 in 2020. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a notable to revenue, the consensus also made a small dip in to its earnings per share forecasts.
There's been no major changes to the price target of US$19.00, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of South Plains Financial'shistorical trends, as next year's 13% revenue growth is roughly in line with 15% annual revenue growth over the past year. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 2.8% next year. So it's pretty clear that South Plains Financial is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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 South Plains Financial. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
Before you take the next step you should know about the 2 warning signs for South Plains Financial (1 is potentially serious!) that we have uncovered.
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