The annual results for 1st Source Corporation (NASDAQ:SRCE) were released last week, making it a good time to revisit its performance. The results were mixed; although revenues of US$289m fell 11% short of analyst estimates, statutory earnings per share (EPS) of US$3.17 beat expectations by 11%. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the three analysts covering 1st Source are now predicting revenues of US$319.3m in 2021. If met, this would reflect a solid 10% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 6.7% to US$2.79 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$319.3m and earnings per share (EPS) of US$2.79 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 7.4% to US$43.67despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of 1st Source's earnings by assigning a price premium. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values 1st Source at US$47.00 per share, while the most bearish prices it at US$42.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting 1st Source is an easy business to forecast or the the analysts are all using similar 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. It's clear from the latest estimates that 1st Source's rate of growth is expected to accelerate meaningfully, with the forecast 10% revenue growth noticeably faster than its historical growth of 4.8%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect 1st Source to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for 1st Source going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for 1st Source that we have uncovered.
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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