Analyst Estimates: Here’s What Brokers Think Of VersaBank (TSE:VBNK) After Its Second-Quarter Report

Jun 8, 2024

VersaBank (TSE:VBNK) missed earnings with its latest quarterly results, disappointing overly-optimistic forecasters. VersaBank missed analyst forecasts, with revenues of CA$29m and statutory earnings per share (EPS) of CA$0.45, falling short by 3.7% and 2.2% respectively. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on VersaBank after the latest results.

See our latest analysis for VersaBank

TSX:VBNK Earnings and Revenue Growth June 8th 2024

Taking into account the latest results, the consensus forecast from VersaBank’s three analysts is for revenues of CA$119.2m in 2024. This reflects an okay 5.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to shrink 2.1% to CA$1.75 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CA$124.1m and earnings per share (EPS) of CA$2.00 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.

Despite the cuts to forecast earnings, there was no real change to the CA$17.25 price target, showing that the analysts don’t think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic VersaBank analyst has a price target of CA$17.50 per share, while the most pessimistic values it at CA$17.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that VersaBank’s revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 18% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.1% annually. So it’s pretty clear that, while VersaBank’s revenue growth is expected to slow, it’s still expected to grow faster than the industry itself.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for VersaBank. They also downgraded VersaBank’s revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target held steady at CA$17.25, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates – from multiple VersaBank analysts – going out to 2025, and you can see them free on our platform here.

You can also see our analysis of VersaBank’s Board and CEO remuneration and experience, and whether company insiders have been buying stock.

Valuation is complex, but we’re helping make it simple.

Find out whether VersaBank is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.

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