Yahoo Finance Results: Cathay General Bancorp Exceeded Expectations And The Consensus Has Updated Its Estimates
Cathay General Bancorp (NASDAQ:CATY) shareholders are probably feeling a little disappointed, since its shares fell 5.6% to US$23.02 in the week after its latest third-quarter results. Revenues were US$147m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.71 were also better than expected, beating analyst predictions by 19%. 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
After the latest results, the five analysts covering Cathay General Bancorp are now predicting revenues of US$605.8m in 2021. If met, this would reflect a decent 9.2% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to descend 12% to US$2.67 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$608.9m and earnings per share (EPS) of US$2.74 in 2021. 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 consensus price target held steady at US$26.80, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Cathay General Bancorp at US$28.00 per share, while the most bearish prices it at US$25.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Cathay General Bancorp is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Cathay General Bancorp'shistorical trends, as next year's 9.2% revenue growth is roughly in line with 8.7% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 1.3% next year. So although Cathay General Bancorp is expected to maintain its revenue growth rate, it's definitely expected to grow faster than 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. Happily, there were no major changes to revenue forecasts, with the business still expected 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Cathay General Bancorp analysts - going out to 2022, and you can see them free on our platform here.
We also provide an overview of the Cathay General Bancorp Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
This article by Simply Wall St is general in nature. 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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