American National Bankshares Inc. (NASDAQ:AMNB) just released its quarterly report and things are looking bullish. American National Bankshares beat earnings, with revenues hitting US$26m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 19%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the three analysts covering American National Bankshares are now predicting revenues of US$95.4m in 2021. If met, this would reflect a reasonable 6.2% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to descend 15% to US$2.21 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$94.4m and earnings per share (EPS) of US$2.08 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$27.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic American National Bankshares analyst has a price target of US$29.50 per share, while the most pessimistic values it at US$25.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that American National Bankshares' revenue growth is expected to slow, with forecast 6.2% increase next year well below the historical 9.7%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) 1.4% next year. Even after the forecast slowdown in growth, it seems obvious that American National Bankshares is also expected 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 American National Bankshares' 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 no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for American National Bankshares going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example - American National Bankshares has 1 warning sign we think you should be aware 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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