First Horizon National Corporation (NYSE:FHN) investors will be delighted, with the company turning in some strong numbers with its latest results. Statutory earnings performance was extremely strong, with revenue of US$1.4b beating expectations by 59% and earnings per share (EPS) of US$0.95, an impressive 66%ahead of expectations. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from First Horizon National’s twelve analysts is for revenues of US$3.08b in 2021, which would reflect a major 57% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to plunge 40% to US$1.14 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.08b and earnings per share (EPS) of US$1.15 in 2021. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$12.48, suggesting that the company has met expectations in its recent result. 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 Horizon National, with the most bullish analyst valuing it at US$14.00 and the most bearish at US$10.50 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
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. The analysts are definitely expecting First Horizon National’s growth to accelerate, with the forecast 57% growth ranking favourably alongside historical growth of 12% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 1.4% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that First Horizon National is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$12.48, 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 First Horizon National. Long-term earnings power is much more important than next year’s profits. We have forecasts for First Horizon National going out to 2022, and you can see them free on our platform here.
That said, it’s still necessary to consider the ever-present spectre of investment risk. We’ve identified 2 warning signs with First Horizon National (at least 1 which is potentially serious) , and understanding them should be part of your investment process.
This article by Simply Wall St is general in nature. 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.