The quarterly results for Umpqua Holdings Corporation (NASDAQ:UMPQ) were released last week, making it a good time to revisit its performance. Revenues of US$303m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$0.36, missing estimates by 7.2%. 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.
Taking into account the latest results, the current consensus from Umpqua Holdings' four analysts is for revenues of US$1.51b in 2022, which would reflect a major 22% increase on its sales over the past 12 months. Statutory earnings per share are expected to tumble 22% to US$1.31 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.60b and earnings per share (EPS) of US$1.18 in 2022. Although the analysts have lowered their sales forecasts, they've also made a decent improvement in their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.
The consensus has made no major changes to the price target of US$20.15, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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. The most optimistic Umpqua Holdings analyst has a price target of US$24.40 per share, while the most pessimistic values it at US$18.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Umpqua Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 50% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Umpqua Holdings is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Umpqua Holdings' earnings potential next year. They also downgraded their revenue estimates, although industry data suggests that Umpqua Holdings' revenues are expected to grow faster than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$20.15, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Umpqua Holdings analysts - going out to 2023, and you can see them free on our platform here.
We also provide an overview of the Umpqua Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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