A week ago, Columbia Banking System, Inc. (NASDAQ:COLB) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. The company beat both earnings and revenue forecasts, with revenue of US$149m, some 5.5% above estimates, and statutory earnings per share (EPS) coming in at US$0.63, 55% ahead of expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Columbia Banking System after the latest results.
Taking into account the latest results, the most recent consensus for Columbia Banking System from five analysts is for revenues of US$546.3m in 2021 which, if met, would be an okay 7.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to reduce 5.4% to US$1.87 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$547.9m and earnings per share (EPS) of US$1.76 in 2021. So the consensus seems to have become somewhat more optimistic on Columbia Banking System's earnings potential following these results.
The consensus price target was unchanged at US$32.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Columbia Banking System analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$30.00. This is a very narrow spread of estimates, implying either that Columbia Banking System is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Columbia Banking System'shistorical trends, as next year's 7.3% revenue growth is roughly in line with 8.2% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 1.1% per year. So although Columbia Banking System is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Columbia Banking System following these results. 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 in mind, we wouldn't be too quick to come to a conclusion on Columbia Banking System. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Columbia Banking System analysts - going out to 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Columbia Banking System you should know about.
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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