Results: German American Bancorp, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Last week, you might have seen that German American Bancorp, Inc. (NASDAQ:GABC) released its third-quarter result to the market. The early response was not positive, with shares down 5.7% to US$29.73 in the past week. The result was positive overall - although revenues of US$52m were in line with what the analysts predicted, German American Bancorp surprised by delivering a statutory profit of US$0.55 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on German American Bancorp after the latest results.

See our latest analysis for German American Bancorp

Taking into account the latest results, the current consensus from German American Bancorp's five analysts is for revenues of US$198.6m in 2021, which would reflect a satisfactory 6.5% increase on its sales over the past 12 months. Statutory earnings per share are forecast to decrease 8.1% to US$1.98 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$193.2m and earnings per share (EPS) of US$1.83 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.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$32.25, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on German American Bancorp, with the most bullish analyst valuing it at US$33.00 and the most bearish at US$32.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that German American Bancorp's revenue growth will slow down substantially, with revenues next year expected to grow 6.5%, compared to a historical growth rate of 13% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.3% next year. Even after the forecast slowdown in growth, it seems obvious that German American Bancorp is also expected to grow faster than the wider 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 German American 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. The consensus price target held steady at US$32.25, with the latest estimates not enough to have an impact on their price targets.

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. We have forecasts for German American Bancorp going out to 2022, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with German American Bancorp , and understanding it should be part of your investment process.

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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