A week ago, Summit Financial Group, Inc. (NASDAQ:SMMF) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Summit Financial Group delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$31m, some 13% above indicated. Statutory EPS were US$0.74, an impressive 124% ahead of forecasts. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Summit Financial Group's two analysts are now forecasting revenues of US$104.9m in 2021. This would be a meaningful 12% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dip 2.1% to US$2.24 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$104.9m and earnings per share (EPS) of US$2.15 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
There's been no major changes to the consensus price target of US$17.50, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Next year brings more of the same, according to the analysts, with revenue forecast to grow 12%, in line with its 12% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 1.4% per year. So although Summit Financial Group is expected to maintain its revenue growth rate, it's definitely 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 Summit Financial Group's 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 analyst estimates for Summit Financial Group going out as far as 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Summit Financial Group that 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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