It’s been a good week for BankUnited, Inc. (NYSE:BKU) shareholders, because the company has just released its latest first-quarter results, and the shares gained 6.7% to US$19.81. Revenues fell 5.0% short of expectations, at US$204m. Earnings correspondingly dipped, with BankUnited reporting a statutory loss of US$0.33 per share, whereas the analysts had previously modelled a profit in this period. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for BankUnited
NYSE:BKU Past and Future Earnings May 1st 2020
Taking into account the latest results, the most recent consensus for BankUnited from 14 analysts is for revenues of US$875.4m in 2020 which, if met, would be a notable 16% increase on its sales over the past 12 months. Statutory earnings per share are expected to nosedive 61% to US$0.84 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$858.9m and earnings per share (EPS) of US$1.86 in 2020. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$23.38, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic BankUnited analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$18.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. The analysts are definitely expecting BankUnited’sgrowth to accelerate, with the forecast 16% growth ranking favourably alongside historical growth of 5.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.9% next year. Factoring in the forecast acceleration in revenue, it’s pretty clear that BankUnited is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BankUnited. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$23.38, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on BankUnited. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for BankUnited going out to 2022, and you can see them free on our platform here..
Don’t forget that there may still be risks. For instance, we’ve identified 2 warning signs for BankUnited that you should be aware of.
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