Investors in The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) had a good week, as its shares rose 2.4% to close at US$30.13 following the release of its full-year results. Results were roughly in line with estimates, with revenues of US$579m and statutory earnings per share of US$4.58. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus, from the five analysts covering Bank of N.T. Butterfield & Son, is for revenues of US$558.3m in 2024. This implies a measurable 3.5% reduction in Bank of N.T. Butterfield & Son's revenue over the past 12 months. Statutory earnings per share are forecast to dip 9.5% to US$4.25 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$558.3m and earnings per share (EPS) of US$4.38 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$35.20, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Bank of N.T. Butterfield & Son, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$32.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 3.5% annualised decline to the end of 2024. That is a notable change from historical growth of 1.8% 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 5.8% per year. It's pretty clear that Bank of N.T. Butterfield & Son's revenues are expected to perform substantially worse 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 Bank of N.T. Butterfield & Son. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$35.20, with the latest estimates not enough to have an impact on their price targets.
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 Bank of N.T. Butterfield & Son going out to 2025, 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 Bank of N.T. Butterfield & Son (at least 1 which is concerning) , and understanding these should be part of your investment process.
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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.