Shares of Northwest Bancshares, Inc. (NWBI) crafted a new 52-week high, touching $15.05 in the first hour of the trading session on Dec 3. However, the stock closed the session at $14.88, which reflects a solid year-to-date return of 24.2%. The trading volume for the session was around 1.2 million shares.
Despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given its strong estimate revisions over the last 60 days and expected long-term earnings growth of 5.0%.
Growth Drivers
Northwest Bancshares’ impressive price performance came on the back of its announcement to acquire a Pa.-based financial advisory firm – Evans Capital Management, Inc. Also, strong third-quarter 2013 results, which included a positive earnings surprise of 18.75% and reduced provision for loan losses was a growth driver.
Recently, Northwest Savings Bank, the subsidiary company of Northwest Bancshares announced a deal to acquire Evans Capital Management that currently holds assets under management and administration worth $240 million. The deal is expected to close by Jan 1, 2014.
The deal will aid Northwest Bancshares in expanding its wealth management activities along with improved customer services. After the acquisition, the company’s assets under management and administration will stand at around $2 billion.
On Oct 21, Northwest Bancshares reported its third-quarter 2013 earnings per share of 19 cents, beating the Zacks Consensus Estimate by 3 cents. Moreover, this compared favorably with earnings per share of 17 cents recorded in the year-ago quarter.
A year-over-year increase of 5.5% in non interest income and a decline of 2.9% in non interest expenses were the tailwinds for the quarter. Also, credit quality improved with provision for loan losses and allowance for loan losses decreasing 27.8% and 6.6%, respectively, year over year. Further net charge-off rate declined 29 basis points year over year to 0.12%.
However, a year-over-year decline of 4.8% in net interest income and an increase of 1.8% in non accrual loans acted as the headwinds for the quarter.
Estimate Revisions Show Potency
Over the last 60 days, all 3 estimates for 2013 have been revised upward, lifting the Zacks Consensus Estimate by 6.3% to 68 cents per share. The Zacks Consensus Estimate for 2014 advanced 3% to 68 cents per share as 2 out of 3 estimates moved north.
Some better-ranked Savings and Loan Institutes include Investors Bancorp Inc. (ISBC), Mutualfirst Financial Inc. (MFSF) and Teche Holding Company (TSH). All these companies carry a Zacks Rank #1 (Strong Buy).
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