Home Bancshares Inc (Conway AR) (NASDAQ:HOMB)’s business is predicted to grow 6.9% during the next year. What should potential investors be aware of? Today I will look at the latest data and investigate into the future of this stock in more detail.
How is HOMB going to perform in the future?
Based on analysts estimates HOMB’s earnings are to grow 33% over the next 3 years. That means that we can be expecting the EPS to grow to $1.74 levels.
Home Bancshares (Conway AR) (NasdaqGS:HOMB) Past Future Earnings Apr 20th 17
This means earnings will be surpassing that seen in recent earnings updates.
In the same period revenue is expected to increase from $474 Million to $794 Million in 2019 and profit is predicted to rise from $177 Million to $294 Million in 2019, roughly growing 1.7x. Margins are expected to be extremely healthy during this time as well.
Is there basis for future growth?
Home Bancshares (Conway AR) has grown its earnings faster than the Banks industry average over the past year.
With Return on Equity of 14% Home Bancshares (Conway AR) has performed better than the Banks industry average of 9.3%, whilst shareholders would consider this acceptable no doubt they are hoping for an improvement in the coming years. This is expected to slightly improve with analysts expecting ROE in 3 years to be 11.5%.
Home Bancshares (Conway AR) (NasdaqGS:HOMB) Future Perf Apr 20th 17
Return on equity (ROE) is a measure of how much profit (net income) a company makes as a percentage of the shareholders equity. Equity is made up of funds from the original issuing of shares and any retained earnings from previous financial years. It varies considerably across sectors, for this reason it is important to asses a stocks ROE relative to its industry. Whilst it is true that the higher the ROE the better the company is performing, ROE does have a weakness. A stock with a disproportionate amount of debt can lead to a small equity base. Thus, a small amount of net income (the numerator) could still produce a high ROE off a modest equity base (the denominator). For this reason investors should always consider the debt situation in conjunction with ROE.
While Home Bancshares (Conway AR) is not a fast growing company, it can still offer very interesting investment opportunities. I recommend you see our latest FREE analysis to find out!
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