Performance of the finance sector stocks in first-quarter earnings has been impressive. Also, going forward, improving economy, higher interest rates, easing banking regulations and rise in demand for loans are expected to support the stocks’ financials.
Therefore, this a good time to add a few banking stocks to your portfolio. Today, we bring one such stock — Civista Bancshares, Inc. CIVB — that continues to indicate strong fundamentals and improving prospects.
The stock has witnessed upward estimate revisions. The Zacks Consensus Estimate has moved 8.8% and 3.8% upward for 2018 and 2019, respectively, over the last 60 days. Also, this Zacks Rank #1 (Strong Buy) stock has rallied 10.3% year to date, outperforming the industry’s rise of 9%.
Why Civista Bancshares Stock is a Solid Pick Now
Earnings growth: Civista Bancshares witnessed 20.5% rise in earnings per share in the last three to five years, significantly above the industry average of 7.6%. This earnings momentum will likely continue in the near term, as reflected by the company’s projected earnings growth of 30.8% for 2018 and 10.9% for 2019.
Also, Civista Bancshares has a decent earnings surprise history. The bank delivered an average positive earnings surprise of 10.3% in the trailing four quarters.
Further, the company’s long-term (three-five years) estimated EPS growth rate of 8.0% promises rewards for investors in the long run.
Revenue strength: Civista Bancshares’ net revenues have seen a compounded annual growth rate of 14.7% over the last five years (2013-2017). The top-line improvement was backed by strong loan and deposit growth. Further, higher interest rates will continue supporting revenues.
The company’s projected sales growth rate of 24.5% and 18.8% for 2018 and 2019, respectively
ensures continuation of the upward revenue trend.
Inorganic growth strategy: Given the strong balance sheet, Civista Bancshares has been growing through acquisitions. In March 2018, the bank announced a deal to acquire Lawrenceburg, IN-based United Community Bancorp UCBA for roughly $114.4 million. Upon expected closure in third-quarter 2018, this stock cum cash transaction will be accretive to 2018 earnings and 9.3% accretive to 2019 earnings. In 2015, the company had acquired TCNB Financial Corporation.
Superior ROE: Civista Bancshares’ return on equity ratio is 11.29% compared with industry average of 9.58%. This indicates that the company reinvests more efficiently compared to the industry.
Stock seems undervalued: Civista Bancshares seems undervalued when compared with the broader industry. Its current price-to-earnings (F1) and price-book ratios are lower than the respective industry averages.
Also, the stock has a Value Score of B. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential. Hence, the stock look promising at present.
Other Stocks Worth Considering
Associated Banc-Corp ASB has witnessed upward earnings estimate revision of 10.7% over the past 60 days for the current year. Also, its share price has increased 8.8% so far this year. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Commerce Bancshares, Inc.’s CBSH earnings estimates for 2018 have been revised 7.4% upward over the past 60 days. The Zacks Rank #1 stock has gained 16.1% year to date.
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