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As you might know, South State Corporation (NASDAQ:SSB) just kicked off its latest third-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 4.7% to hit US$385m. South State also reported a statutory profit of US$1.34, which was an impressive 20% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 current consensus from South State's seven analysts is for revenues of US$1.41b in 2021, which would reflect a sizeable 97% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 132% to US$4.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.40b and earnings per share (EPS) of US$3.93 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 6.6% to US$64.31, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. Currently, the most bullish analyst values South State at US$74.00 per share, while the most bearish prices it at US$55.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the South State's past performance and to peers in the same industry. The analysts are definitely expecting South State's growth to accelerate, with the forecast 97% growth ranking favourably alongside historical growth of 9.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that South State 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 South State following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on South State. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple South State analysts - going out to 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 5 warning signs for South State (1 doesn't sit too well with us!) that you should be aware of.
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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