Earnings Miss: James River Group Holdings, Ltd. Missed EPS By 14% And Analysts Are Revising Their Forecasts
Investors in James River Group Holdings, Ltd. (NASDAQ:JRVR) had a good week, as its shares rose 6.0% to close at US$46.10 following the release of its yearly results. Revenues were in line with forecasts, at US$907m, although statutory earnings per share came in 14% below what analysts expected, at US$1.25 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for James River Group Holdings
Following the recent earnings report, the consensus fromdual analysts covering James River Group Holdings expects revenues of US$686.0m in 2020, implying a stressful 24% decline in sales compared to the last 12 months. Statutory earnings per share are expected to leap 66% to US$2.10. Yet prior to the latest earnings, analysts had been forecasting revenues of US$686.0m and earnings per share (EPS) of US$2.10 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 6.5% to US$42.80 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of James River Group Holdings's earnings by assigning a price premium.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 24% a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 0.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect James River Group Holdings to grow slower than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that James River Group Holdings's revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe 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 James River Group Holdings. Long-term earnings power is much more important than next year's profits. We have analyst estimates for James River Group Holdings going out as far as 2020, and you can see them free on our platform here.
We also provide an overview of the James River Group Holdings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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