Investors in Sandy Spring Bancorp, Inc. (NASDAQ:SASR) had a good week, as its shares rose 7.1% to close at US$21.37 following the release of its quarterly results. Sandy Spring Bancorp reported in line with analyst predictions, delivering revenues of US$98m and statutory earnings per share of US$0.45, suggesting the business is executing well and in line with its plan. 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.
Following last week's earnings report, Sandy Spring Bancorp's five analysts are forecasting 2024 revenues to be US$406.6m, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 9.5% to US$1.85 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$416.4m and earnings per share (EPS) of US$2.06 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
The analysts made no major changes to their price target of US$25.20, suggesting the downgrades are not expected to have a long-term impact on Sandy Spring Bancorp's valuation. 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 Sandy Spring Bancorp at US$27.00 per share, while the most bearish prices it at US$24.00. This is a very narrow spread of estimates, implying either that Sandy Spring Bancorp is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Sandy Spring Bancorp's revenue growth is expected to slow, with the forecast 2.3% annualised growth rate until the end of 2024 being well below the historical 8.4% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.0% annually. Factoring in the forecast slowdown in growth, it seems obvious that Sandy Spring Bancorp is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sandy Spring Bancorp. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$25.20, 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. We have forecasts for Sandy Spring Bancorp going out to 2025, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Sandy Spring Bancorp that you need to take into consideration.
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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.