Investors in Eagle Bancorp, Inc. (NASDAQ:EGBN) had a good week, as its shares rose 6.6% to close at US$31.45 following the release of its third-quarter results. It looks like a credible result overall - although revenues of US$79m were what the analysts expected, Eagle Bancorp surprised by delivering a (statutory) profit of US$1.28 per share, an impressive 59% above what was 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Eagle Bancorp after the latest results.
Following last week's earnings report, Eagle Bancorp's five analysts are forecasting 2021 revenues to be US$324.2m, approximately in line with the last 12 months. Statutory earnings per share are expected to shrink 6.9% to US$3.67 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$324.5m and earnings per share (EPS) of US$3.60 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$34.20. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Eagle Bancorp at US$38.00 per share, while the most bearish prices it at US$30.00. This is a very narrow spread of estimates, implying either that Eagle Bancorp is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Eagle Bancorp's past performance and to peers in the same industry. We would highlight that Eagle Bancorp's revenue growth is expected to slow, with forecast 1.7% increase next year well below the historical 6.4%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. So it's pretty clear that, while Eagle Bancorp's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$34.20, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Eagle Bancorp. Long-term earnings power is much more important than next year's profits. We have forecasts for Eagle Bancorp going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Eagle Bancorp (1 can't be ignored!) that we have uncovered.
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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