Provident Bancorp, Inc. (NASDAQ:PVBC) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 6.8% to hit US$14m. Provident Bancorp also reported a statutory profit of US$0.18, which was an impressive 64% above what the analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the dual analysts covering Provident Bancorp are now predicting revenues of US$55.7m in 2021. If met, this would reflect a solid 16% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 16% to US$0.68. Before this earnings announcement, the analysts had been modelling revenues of US$52.3m and losses of US$0.035 per share in 2021. The analysts have definitely been lifting their expectations, with the company expected to reach profitability next year - sooner than expected - thanks to the small lift in revenue expectations.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 15% to US$9.50per share.
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. It's clear from the latest estimates that Provident Bancorp's rate of growth is expected to accelerate meaningfully, with the forecast 16% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 7.0% next year. It seems obvious that as part of the brighter growth outlook, Provident Bancorp is expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Provident Bancorp to become profitable next year. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
You can also view our analysis of Provident Bancorp's balance sheet, and whether we think Provident Bancorp is carrying too much debt, for free on our platform 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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