Western Alliance Bancorporation Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Western Alliance Bancorporation (NYSE:WAL) shareholders are probably feeling a little disappointed, since its shares fell 4.2% to US$30.99 in the week after its latest first-quarter results. Statutory earnings per share fell badly short of expectations, coming in at US$0.83, some 24% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$285m. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Western Alliance Bancorporation after the latest results.
View our latest analysis for Western Alliance Bancorporation
Taking into account the latest results, the current consensus from Western Alliance Bancorporation's ten analysts is for revenues of US$1.17b in 2020, which would reflect a meaningful 11% increase on its sales over the past 12 months. Statutory earnings per share are forecast to fall 13% to US$3.94 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.14b and earnings per share (EPS) of US$4.26 in 2020. So it's pretty clear consensus is mixed on Western Alliance Bancorporation after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
The analysts also cut Western Alliance Bancorporation's price target 5.0% to US$38.67, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in sales. 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 Western Alliance Bancorporation, with the most bullish analyst valuing it at US$44.00 and the most bearish at US$32.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. We would highlight that Western Alliance Bancorporation's revenue growth is expected to slow, with forecast 11% increase next year well below the historical 18%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.5% next year. Even after the forecast slowdown in growth, it seems obvious that Western Alliance Bancorporation is also expected to grow faster than the wider 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. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Western Alliance Bancorporation's future valuation.
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. At Simply Wall St, we have a full range of analyst estimates for Western Alliance Bancorporation going out to 2021, and you can see them free on our platform here..
It is also worth noting that we have found 3 warning signs for Western Alliance Bancorporation that you need to take into consideration.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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