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Analyst Blog

BancorpSouth, Inc. (BXS - Analyst Report) shares rose 1.9% as the company regained investors’ confidence by announcing a 50% increase in its quarterly cash dividend. With this, the company’s new dividend stands at 7.5 cents per common share.

Shares of BancorpSouth had plunged 10.7% following its second-quarter earnings release. Though the company reported improved earnings, investors lost conviction in the stock due to delayed mergers as well as weak mortgage market which may hinder profitability of the company going forward.

The new dividend will be paid on Oct 1, 2014 to shareholders of record as of Sep 15. Notably, prior to this, BancorpSouth had raised its dividend in Aug 2013 to 5 cents per common share from 1 cent.

Looking Forward

BancorpSouth’s focus on organic and inorganic activities as well as its strong capital position is commendable. However, lack of improvement in the mortgage market and the rampant strict regulatory backdrop are keeping investors wary.

If the postponed mergers are successfully completed and the company continues to show growth in the top line in spite of the prevailing low interest environment, it can turn things around in its favor and regain investors’ confidence.

A Sneak Peek into Recent Earnings

BancorpSouth’s second-quarter 2014 earnings per share came in at 33 cents, in line with the Zacks Consensus Estimate. However, earnings compared favorably with the prior-year quarter figure of 29 cents. (Read more: BancorpSouth Q2 Earnings In-Line with Estimates, Rises Y/Y)

Currently, BancorpSouth carries a Zacks Rank #4 (Sell).

Dividend Hikes by Other Banks

In June, Washington Federal Inc. (WAFD - Analyst Report) announced a 10.0% increase in its quarterly common stock dividend to 11 cents per share while Fifth Third Bancorp (FITB - Analyst Report) declared an 8.3% rise in its quarterly cash dividend to 13 cents per common share. Additionally, U.S. Bancorp (USB - Analyst Report) enhanced its quarterly common stock dividend by 6.5% to 24.5 cents per share.

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