Community Bank System, Inc. (NYSE:CBU) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results look mixed – while revenue fell marginally short of analyst estimates at US$576m, statutory earnings beat expectations 2.8%, with Community Bank System reporting profits of US$3.08 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Community Bank System
After the latest results, the six analysts covering Community Bank System are now predicting revenues of US$607.9m in 2021. If met, this would reflect a modest 5.6% improvement in sales compared to the last 12 months. Statutory per-share earnings are expected to be US$3.01, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$604.0m and earnings per share (EPS) of US$2.91 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$67.25, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Community Bank System, with the most bullish analyst valuing it at US$72.00 and the most bearish at US$60.00 per share. This is a very narrow spread of estimates, implying either that Community Bank System is an easy company to value, or – more likely – the analysts are relying heavily on some key assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s pretty clear that there is an expectation that Community Bank System’s revenue growth will slow down substantially, with revenues next year expected to grow 5.6%, compared to a historical growth rate of 9.9% over the past five years. Compare this to the 694 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.3% per year. So it’s pretty clear that, while Community Bank System’s revenue growth is expected to slow, it’s expected to grow roughly in line with the 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 Community Bank System following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 in mind, we wouldn’t be too quick to come to a conclusion on Community Bank System. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Community Bank System 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 Community Bank System that we have uncovered.
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