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A week ago, Washington Trust Bancorp, Inc. (NASDAQ:WASH) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 15% higher than the analysts had forecast, at US$57m, while EPS were US$1.21 beating analyst models by 103%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Washington Trust Bancorp from five analysts is for revenues of US$215.6m in 2020 which, if met, would be a credible 7.7% increase on its sales over the past 12 months. Statutory earnings per share are expected to reduce 3.5% to US$3.74 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$204.1m and earnings per share (EPS) of US$2.73 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a sizeable expansion in earnings per share in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$40.00, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Washington Trust Bancorp, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$37.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Washington Trust Bancorp's rate of growth is expected to accelerate meaningfully, with the forecast 7.7% revenue growth noticeably faster than its historical growth of 5.2%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Washington Trust Bancorp 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 Washington Trust Bancorp following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$40.00, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Washington Trust Bancorp going out to 2022, and you can see them free on our platform here..
Even so, be aware that Washington Trust Bancorp is showing 1 warning sign in our investment analysis , you should know about...
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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