Investors in Republic First Bancorp, Inc. (NASDAQ:FRBK) had a good week, as its shares rose 8.6% to close at US$2.41 following the release of its second-quarter results. Revenues were US$29m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.04, an impressive 100% ahead of estimates. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Republic First Bancorp from two analysts is for revenues of US$124.4m in 2020 which, if met, would be a solid 18% increase on its sales over the past 12 months. Earnings are expected to improve, with Republic First Bancorp forecast to report a statutory profit of US$0.095 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$131.2m and losses of US$0.05 per share in 2020. While we note the small dip in to the revenue outlook, the analysts are now also predicting for the business to become profitable next year - sooner than previously forecast - which looks like a pretty clear lift in expectations.
The average price target increased 8.3% to US$3.25, with the analysts signalling that the improved earnings outlook is more important to the company's valuation than its revenue.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Republic First Bancorp'shistorical trends, as next year's 18% revenue growth is roughly in line with 18% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 1.9% next year. So although Republic First Bancorp is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts now expect Republic First Bancorp to become profitable next year, compared to previous expectations that it would report a loss. They also downgraded their revenue estimates, although industry data suggests that Republic First Bancorp's revenues are expected to grow faster than the wider industry. Still, earnings are more important to the intrinsic value of the business. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Republic First Bancorp going out as far as 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 Republic First 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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