Celebrations may be in order for First Hawaiian, Inc. (NASDAQ:FHB) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that First Hawaiian will make substantially more sales than they'd previously expected.
Following this upgrade, First Hawaiian's six analysts are forecasting 2023 revenues to be US$792m, approximately in line with the last 12 months. Per-share earnings are expected to ascend 11% to US$2.33. Before this latest update, the analysts had been forecasting revenues of US$700m and earnings per share (EPS) of US$2.31 in 2023. It seems analyst sentiment has certainly become more bullish on revenues, even though they haven't changed their view on earnings per share.
Even though revenue forecasts increased, there was no change to the consensus price target of US$26.79, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic First Hawaiian analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$23.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the First Hawaiian's past performance and to peers in the same industry. We would highlight that First Hawaiian's revenue growth is expected to slow, with the forecast 0.06% annualised growth rate until the end of 2023 being well below the historical 0.6% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that First Hawaiian is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at First Hawaiian.
Better yet, our automated discounted cash flow calculation (DCF) suggests First Hawaiian could be moderately undervalued. You can learn more about our valuation methodology on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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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