Central Pacific Financial Corp. Just Missed Earnings - But Analysts Have Updated Their Models

Shareholders might have noticed that Central Pacific Financial Corp. (NYSE:CPF) filed its quarterly result this time last week. The early response was not positive, with shares down 8.9% to US$13.77 in the past week. It was not a great result overall. While revenues of US$61m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 17% to hit US$0.24 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Central Pacific Financial

Taking into account the latest results, the current consensus from Central Pacific Financial's three analysts is for revenues of US$234.3m in 2021, which would reflect a notable 19% increase on its sales over the past 12 months. Statutory earnings per share are forecast to sink 12% to US$1.24 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$232.6m and earnings per share (EPS) of US$1.01 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.

There's been no major changes to the consensus price target of US$18.67, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock'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 Central Pacific Financial at US$22.00 per share, while the most bearish prices it at US$15.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Central Pacific Financial's rate of growth is expected to accelerate meaningfully, with the forecast 19% revenue growth noticeably faster than its historical growth of 1.4%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 1.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Central Pacific Financial is expected to grow much faster than its 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 Central Pacific Financial 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 Central Pacific Financial. Long-term earnings power is much more important than next year's profits. We have forecasts for Central Pacific Financial going out to 2022, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Central Pacific Financial that you should be aware of.

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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