Yahoo Finance Canadian Western Bank (TSE:CWB) Just Reported Earnings, And Analysts Cut Their Target Price
Canadian Western Bank (TSE:CWB) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to CA$25.53 in the week after its latest second-quarter results. It looks like the results were a bit of a negative overall. While revenues of CA$286m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.8% to hit CA$0.79 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Canadian Western Bank
Taking into account the latest results, the current consensus from Canadian Western Bank's eight analysts is for revenues of CA$1.18b in 2024. This would reflect a solid 8.3% increase on its revenue over the past 12 months. Statutory per share are forecast to be CA$3.40, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$1.18b and earnings per share (EPS) of CA$3.55 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The average price target fell 7.8% to CA$31.45, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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 Canadian Western Bank analyst has a price target of CA$37.00 per share, while the most pessimistic values it at CA$28.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Canadian Western Bank's past performance and to peers in the same industry. The analysts are definitely expecting Canadian Western Bank's growth to accelerate, with the forecast 17% annualised growth to the end of 2024 ranking favourably alongside historical growth of 8.0% per annum 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 5.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Canadian Western Bank 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 Canadian Western Bank. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Canadian Western Bank's future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Canadian Western Bank analysts - going out to 2026, and you can see them free on our platform here.
It might also be worth considering whether Canadian Western Bank's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, 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.
