It's shaping up to be a tough period for Valley National Bancorp (NASDAQ:VLY), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$1.8b, statutory earnings missed forecasts by 10%, coming in at just US$0.95 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Valley National Bancorp
NasdaqGS:VLY Earnings and Revenue Growth January 28th 2024
Taking into account the latest results, the consensus forecast from Valley National Bancorp's twelve analysts is for revenues of US$1.95b in 2024. This reflects a reasonable 6.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 6.8% to US$1.01. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.96b and earnings per share (EPS) of US$1.09 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$11.41, 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. The most optimistic Valley National Bancorp analyst has a price target of US$12.50 per share, while the most pessimistic values it at US$8.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. We would highlight that Valley National Bancorp's revenue growth is expected to slow, with the forecast 6.7% annualised growth rate until the end of 2024 being well below the historical 16% p.a. growth over the last five years. Compare this to the 778 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.6% per year. So it's pretty clear that, while Valley National Bancorp's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$11.41, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Valley National Bancorp going out to 2026, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for Valley National Bancorp that you need to be mindful of.
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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.