First Community Corporation Just Missed Earnings And Its EPS Looked Sad - But Analysts Have Updated Their Models

Investors in First Community Corporation (NASDAQ:FCCO) had a good week, as its shares rose 4.5% to close at US$14.51 following the release of its quarterly results. It looks like a pretty bad result, all things considered. Although revenues of US$12m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 21% 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for First Community

Following the latest results, First Community's five analysts are now forecasting revenues of US$49.6m in 2020. This would be a credible 2.1% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to dive 30% to US$0.97 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$49.0m and earnings per share (EPS) of US$1.25 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$16.63, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on First Community, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$16.00 per share. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that First Community is an easy business to forecast or that the the analysts are all using similar assumptions.

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 First Community's revenue growth is expected to slow, with forecast 2.1% increase next year well below the historical 9.6%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 2.9% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than First Community.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for First Community. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that First Community's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$16.63, 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 First Community analysts - going out to 2021, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for First Community (1 can't be ignored!) that you need to take into consideration.

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