Yahoo Finance Capitol Federal Financial, Inc. Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models
Capitol Federal Financial, Inc. (NASDAQ:CFFN) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like a pretty bad result, all things considered. Although revenues of US$53m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 79% to hit US$0.03 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
View our latest analysis for Capitol Federal Financial
Taking into account the latest results, the current consensus from Capitol Federal Financial's three analysts is for revenues of US$215.5m in 2020, which would reflect a solid 9.1% increase on its sales over the past 12 months. Statutory earnings per share are forecast to descend 15% to US$0.45 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$210.5m and earnings per share (EPS) of US$0.54 in 2020. While next year's revenue estimates increased, there was also a real cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
There's been no major changes to the price target of US$13.67, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Capitol Federal Financial analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$13.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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 clear from the latest estimates that Capitol Federal Financial's rate of growth is expected to accelerate meaningfully, with the forecast 9.1% revenue growth noticeably faster than its historical growth of 1.0%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Capitol Federal Financial is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Capitol Federal Financial. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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 in mind, we wouldn't be too quick to come to a conclusion on Capitol Federal Financial. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Capitol Federal Financial analysts - going out to 2021, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Capitol Federal Financial that you should be aware of.
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