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Results: Alerus Financial Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts

A week ago, Alerus Financial Corporation (NASDAQ:ALRS) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. Statutory earnings performance was extremely strong, with revenue of US$58m beating expectations by 23% and earnings per share (EPS) of US$0.65, an impressive 107%ahead of expectations. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Alerus Financial after the latest results.

See our latest analysis for Alerus Financial

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Following last week's earnings report, Alerus Financial's three analysts are forecasting 2020 revenues to be US$195.0m, approximately in line with the last 12 months. Statutory earnings per share are expected to decline 20% to US$1.43 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$195.0m and earnings per share (EPS) of US$1.38 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 7.5% to US$21.50, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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 Alerus Financial analyst has a price target of US$22.00 per share, while the most pessimistic values it at US$21.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business 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 Alerus Financial's revenue growth is expected to slow, with forecast 1.9% increase next year well below the historical 5.2%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.6% next year. Factoring in the forecast slowdown in growth, it looks like Alerus Financial is forecast to grow at about the same rate as the wider 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 Alerus Financial following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Alerus Financial going out to 2021, 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 Alerus Financial (1 makes us a bit uncomfortable!) that you need to be mindful 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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