Shares of Chemical Financial Corporation (CHFC) crafted a new 52-week high, touching $33.26 on Mar 25. However, the stock of this Midwest bank closed the session at $32.96, reflecting a solid return of 28.3% in a year’s time. The trading volume for the session was 51,710 shares.
Despite hitting its 52-week high, this Zacks Rank #2 (Buy) stock has plenty of upside left, given the strong estimate revisions it witnessed over the last 60 days. Further, the long-term expected EPS growth rate now stands at 4.0%.
Growth Drivers
The recent announcement to acquire Northwestern Bancorp, Inc. and strong fourth-quarter 2013 results were the primary growth drivers for Chemical Financial.
On Mar 11, Chemical Financial declared that it has inked a deal to acquire Michigan based savings bank Northwestern Bancorp for an all cash offer of $120 million. The deal is expected to close in third-quarter 2014.
According to the terms of the deal, Chemical Financial will purchase all the outstanding common shares of Northwestern Bancorp and proposes to merge Northwestern's banking subsidiary with Chemical Financial's banking subsidiary that will run under the Chemical Bank name. The deal is expected to add around 16% to earnings per share and will incur an estimated integration cost of around $13 million.
On Jan 27, Chemical Financial came out with fourth-quarter 2013 earnings per share of 48 cents. Though the company posted in-line earnings, the reported figure was above the prior-year earnings of 42 cents.
Results were aided by growth in interest income and non interest income, partially offset by higher operating expenses. Further, the quarter witnessed increase in loan and deposit balances and reflected a better asset quality.
Notably, the company has delivered positive earnings surprises in 3 quarters of 2013, with an average beat of 5.5%.
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for 2014 advanced 3.0% to $2.05 per share. Also, for 2015, it moved north 14.1% to $2.42 per share.
Some other stocks in this space worth considering include First Financial Corp. (THFF), First Merchants Corp. (FRME) and Lakeland Financial Corp. (LKFN). All these companies carry a Zacks Rank #1 (Strong Buy).
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