Celebrations may be in order for MainStreet Bancshares, Inc. (NASDAQ:MNSB) shareholders, with the covering analyst delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.
Following the upgrade, the current consensus from MainStreet Bancshares' solitary analyst is for revenues of US$90m in 2023 which - if met - would reflect a substantial 24% increase on its sales over the past 12 months. Statutory earnings per share are presumed to climb 18% to US$4.02. Previously, the analyst had been modelling revenues of US$80m and earnings per share (EPS) of US$3.56 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
See our latest analysis for MainStreet Bancshares
Despite these upgrades, the analyst has not made any major changes to their price target of US$32.13, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 MainStreet Bancshares analyst has a price target of US$33.00 per share, while the most pessimistic values it at US$31.25. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analyst has a clear view on its prospects.
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 period to the end of 2023 brings more of the same, according to the analyst, with revenue forecast to display 24% growth on an annualised basis. That is in line with its 22% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.5% annually. So although MainStreet Bancshares is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at MainStreet Bancshares.
Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on MainStreet Bancshares that suggests the company could be somewhat undervalued. For more information, you can click through to our platform to learn more about our valuation approach.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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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