RBB Bancorp (NASDAQ:RBB) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 8.2% to hit US$30m. RBB Bancorp also reported a statutory profit of US$0.43, which was an impressive 33% above what the analysts had forecast. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from RBB Bancorp's three analysts is for revenues of US$131.2m in 2021, which would reflect a substantial 25% increase on its sales over the past 12 months. Statutory earnings per share are predicted to step up 13% to US$1.84. In the lead-up to this report, the analysts had been modelling revenues of US$128.1m and earnings per share (EPS) of US$1.68 in 2021. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that the analysts have increased their price target for RBB Bancorp 7.6% to US$15.25on the back of these upgrades. 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. There are some variant perceptions on RBB Bancorp, with the most bullish analyst valuing it at US$16.50 and the most bearish at US$13.50 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. The analysts are definitely expecting RBB Bancorp's growth to accelerate, with the forecast 25% growth ranking favourably alongside historical growth of 20% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.3% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that RBB 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 RBB Bancorp 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on RBB Bancorp. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple RBB Bancorp analysts - going out to 2022, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for RBB Bancorp that you need to be mindful of.
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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