Shareholders might have noticed that Associated Banc-Corp (NYSE:ASB) filed its third-quarter result this time last week. The early response was not positive, with shares down 4.1% to US$13.69 in the past week. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$258m, statutory earnings beat expectations by a notable 19%, coming in at US$0.26 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the ten analysts covering Associated Banc-Corp, is for revenues of US$1.08b in 2021, which would reflect a not inconsiderable 13% reduction in Associated Banc-Corp's sales over the past 12 months. Statutory earnings per share are expected to plummet 48% to US$1.11 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.07b and earnings per share (EPS) of US$1.07 in 2021. So the consensus seems to have become somewhat more optimistic on Associated Banc-Corp's earnings potential following these results.
The consensus price target was unchanged at US$15.67, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Associated Banc-Corp at US$18.00 per share, while the most bearish prices it at US$14.00. This is a very narrow spread of estimates, implying either that Associated Banc-Corp is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 13%, a significant reduction from annual growth of 6.4% 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 1.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Associated Banc-Corp is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Associated Banc-Corp's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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.
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 Associated Banc-Corp going out to 2022, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Associated Banc-Corp (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
