Earnings Update: Here's Why Analysts Just Lifted Their Auswide Bank Ltd Price Target To AU$6.88
It's been a good week for Auswide Bank Ltd (ASX:ABA) shareholders, because the company has just released its latest half-yearly results, and the shares gained 5.1% to AU$6.62. It was a pretty mixed result, with revenues beating expectations to hit AU$40m. Statutory earnings fell 4.6% short of analyst forecasts, reaching AU$0.22 per share. Following the result, 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. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Auswide Bank
After the latest results, the twin analysts covering Auswide Bank are now predicting revenues of AU$79.8m in 2020. If met, this would reflect an okay 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 6.2% to AU$0.45. Before this earnings report, analysts had been forecasting revenues of AU$76.4m and earnings per share (EPS) of AU$0.44 in 2020. It looks like there's been a modest increase in sentiment following the latest results, with analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that analysts have increased their price target for Auswide Bank 6.2% to AU$6.88 on the back of these upgrades.
In addition, we can look to Auswide Bank's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's clear from the latest estimates that Auswide Bank's rate of growth is expected to accelerate meaningfully, with forecast 7.1% revenue growth noticeably faster than its historical growth of 4.5%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue shrink 19% per year. So it's clear with the acceleration in growth, Auswide Bank is expected to grow meaningfully faster than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Auswide Bank's earnings potential next year. Fortunately analysts also upgraded their revenue estimates, with sales performing well and Auswide Bank's revenue growth expected to exceed the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
It might also be worth considering whether Auswide Bank's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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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