Yahoo Finance Cathay General Bancorp Just Missed Revenue By 6.6%: Here's What Analysts Think Will Happen Next
Last week saw the newest quarterly earnings release from Cathay General Bancorp (NASDAQ:CATY), an important milestone in the company's journey to build a stronger business. Results look mixed - while revenue fell marginally short of analyst estimates at US$175m, statutory earnings were in line with expectations, at US$0.98 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Cathay General Bancorp
Taking into account the latest results, the current consensus, from the six analysts covering Cathay General Bancorp, is for revenues of US$733.6m in 2024. This implies a noticeable 3.3% reduction in Cathay General Bancorp's revenue over the past 12 months. Statutory earnings per share are expected to drop 15% to US$3.86 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$759.2m and earnings per share (EPS) of US$4.02 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The analysts made no major changes to their price target of US$39.83, suggesting the downgrades are not expected to have a long-term impact on Cathay General Bancorp's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Cathay General Bancorp at US$44.00 per share, while the most bearish prices it at US$34.00. This is a very narrow spread of estimates, implying either that Cathay General Bancorp is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 4.4% by the end of 2024. This indicates a significant reduction from annual growth of 7.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cathay General Bancorp is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Cathay General Bancorp. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$39.83, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Cathay General Bancorp going out to 2025, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Cathay General Bancorp you should be aware of, and 1 of them can't be ignored.
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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.
