TCF Financial Corporation (NASDAQ:TCF) shares fell 6.5% to US$42.30 in the week since its latest yearly results. TCF Financial missed revenue estimates by 3.7%, with sales of US$1.7b, although statutory earnings per share (EPS) of US$2.55 beat expectations, coming in 6.2% ahead of analyst estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the current consensus from TCF Financial's 13 analysts is for revenues of US$2.23b in 2020, which would reflect a substantial 32% increase on its sales over the past 12 months. Statutory earnings per share are expected to surge 39% to US$3.56. In the lead-up to this report, analysts had been modelling revenues of US$2.25b and earnings per share (EPS) of US$3.68 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$50.07, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 TCF Financial at US$55.00 per share, while the most bearish prices it at US$46.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the TCF Financial's past performance and to peers in the same market. It's clear from the latest estimates that TCF Financial's rate of growth is expected to accelerate meaningfully, with forecast 32% revenue growth noticeably faster than its historical growth of 6.1%p.a. 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 5.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that TCF Financial is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$50.07, 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 TCF Financial. Long-term earnings power is much more important than next year's profits. We have forecasts for TCF Financial going out to 2021, and you can see them free on our platform here.
You can also view our analysis of TCF Financial's balance sheet, and whether we think TCF Financial is carrying too much debt, for free on our platform here.
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.
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