It's been a good week for Provident Financial Holdings, Inc. (NASDAQ:PROV) shareholders, because the company has just released its latest second-quarter results, and the shares gained 4.1% to US$15.10. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$9.6m, statutory earnings beat expectations by a notable 22%, coming in at US$0.31 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Provident Financial Holdings after the latest results.
Taking into account the latest results, the current consensus, from the dual analysts covering Provident Financial Holdings, is for revenues of US$39.2m in 2024. This implies a perceptible 2.9% reduction in Provident Financial Holdings' revenue over the past 12 months. Statutory earnings per share are forecast to reduce 4.3% to US$1.10 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$40.0m and earnings per share (EPS) of US$1.28 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.
What's most unexpected is that the consensus price target rose 19% to US$15.50, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.
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. We would also point out that the forecast 5.7% annualised revenue decline to the end of 2024 is roughly in line with the historical trend, which saw revenues shrink 5.9% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.6% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Provident Financial Holdings to suffer worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Provident Financial Holdings. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Provident Financial Holdings. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Provident Financial Holdings going out as far as 2025, and you can see them free on our platform here.
You can also view our analysis of Provident Financial Holdings' balance sheet, and whether we think Provident Financial Holdings is carrying too much debt, for free on our platform here.
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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.