U.S. markets open in 2 hours 15 minutes
  • S&P Futures

    4,442.25
    -3.50 (-0.08%)
     
  • Dow Futures

    34,742.00
    +68.00 (+0.20%)
     
  • Nasdaq Futures

    15,240.25
    -78.50 (-0.51%)
     
  • Russell 2000 Futures

    2,249.50
    +5.50 (+0.25%)
     
  • Crude Oil

    74.91
    +0.93 (+1.26%)
     
  • Gold

    1,748.30
    -3.40 (-0.19%)
     
  • Silver

    22.58
    +0.16 (+0.69%)
     
  • EUR/USD

    1.1710
    -0.0008 (-0.07%)
     
  • 10-Yr Bond

    1.4600
    0.0000 (0.00%)
     
  • Vix

    18.70
    +0.07 (+0.38%)
     
  • GBP/USD

    1.3710
    +0.0029 (+0.21%)
     
  • USD/JPY

    110.9800
    +0.2950 (+0.27%)
     
  • BTC-USD

    43,668.90
    +490.73 (+1.14%)
     
  • CMC Crypto 200

    1,088.40
    -14.66 (-1.33%)
     
  • FTSE 100

    7,056.14
    +4.66 (+0.07%)
     
  • Nikkei 225

    30,240.06
    -8.75 (-0.03%)
     

Webster Financial Corporation Just Beat EPS By 12%: Here's What Analysts Think Will Happen Next

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

It's been a pretty great week for Webster Financial Corporation (NYSE:WBS) shareholders, with its shares surging 19% to US$33.74 in the week since its latest quarterly results. Revenues were US$294m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.75 were also better than expected, beating analyst predictions by 12%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Webster Financial

earnings-and-revenue-growth
earnings-and-revenue-growth

Following the latest results, Webster Financial's nine analysts are now forecasting revenues of US$1.18b in 2021. This would be a solid 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 5.1% to US$2.81. In the lead-up to this report, the analysts had been modelling revenues of US$1.18b and earnings per share (EPS) of US$2.48 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 12% to US$34.58. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Webster Financial, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$27.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Webster Financial shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Webster Financial's rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 6.6%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 1.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Webster Financial to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Webster Financial's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Webster Financial analysts - going out to 2022, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Webster Financial 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.