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Why You Should Buy First Internet Bancorp (INBK) Stock Now
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It seems to be a wise idea to add First Internet Bancorp (INBK - Free Report) stock to your portfolio now, given the company’s strong fundamentals and decent growth prospects. The company is well-poised to benefit from solid loan and deposit balances, high interest rates, business streamlining efforts and a strong balance sheet.
Analysts seem optimistic regarding the company’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for INBK’s earnings has been revised 14.3% and 17.6% upward for 2023 and 2024, respectively. The stock presently sports a Zacks Rank #1 (Strong Buy).
Shares of the company have surged 72.5% in the past three months, outperforming the industry’s 14.4% rally by a considerable margin.
Image Source: Zacks Investment Research
Some factors that make First Internet Bancorp an attractive pick right now.
Earnings Growth: In the last three-five years, INBK witnessed earnings growth of 13.6%, higher than the industry average of 12.3%. While the company’s earnings are projected to decline 67.6% this year amid a tough operating backdrop, the trend will likely reverse in the future. In 2024, earnings are projected to jump 122.1%.
Revenue Strength: The company’s revenues witnessed a CAGR of 13.6% over the four-year period ended 2022. The improvement was driven by solid loan and deposit balance and efforts to bolster fee income. Also, since 2022, higher interest rates have aided INBK’s top line.
Additionally, in January, First Internet Bancorp announced plans to exit its consumer mortgage business on the back of a sharp fall in mortgage volumes “and the negative outlook for mortgage lending over the next several years.” This included the company’s nationwide digital direct-to-consumer mortgage platform as well as its local traditional consumer mortgage and construction-to-permanent business. This move is likely to lower total non-interest expenses by almost $6.8 million annually.
Though the above-mentioned business restructuring effort will support long-term growth, revenues are likely to be affected in the near term. The top line is expected to decline 17.6% in 2023 before rebounding and growing 13.1% next year.
Steady Capital Deployments: First Internet Bancorp has been paying quarterly dividend of 6 cents per share. The company has a share repurchase program in place. In December 2022, it announced a new share buyback plan, authorizing up to $25 million worth of shares. The plan expires on Dec 31, 2023. Under this program, INBK repurchased 411,188 shares through Jun 30, 2023, for $7.8 million. Given the earnings strength, the company’s capital deployment activities seem sustainable and will enhance shareholder value.
Favorable Valuation: First Internet Bancorp stock looks undervalued right now with respect to its price-to-book (P/B) and price-to-sales (P/S) ratios. It has a P/B ratio of 0.53, lower than the industry average of 0.91. Also, the company’s P/S ratio of 0.84 is below the industry average of 1.80.
INBK 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.
Other Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are Live Oak Bancshares, Inc. (LOB - Free Report) and Popular, Inc. (BPOP - Free Report) .
Live Oak Bancshares currently sports a Zacks Rank #1. Earnings estimates for 2023 have been revised 19.7% north over the past 30 days. In the past three months, LOB’s shares have surged 49.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Popular have been revised 10.5% north for 2023 over the past 30 days. Shares of BPOP have rallied 13.1% in the past three months. Currently, the company carries a Zacks Rank #2.
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Why You Should Buy First Internet Bancorp (INBK) Stock Now
It seems to be a wise idea to add First Internet Bancorp (INBK - Free Report) stock to your portfolio now, given the company’s strong fundamentals and decent growth prospects. The company is well-poised to benefit from solid loan and deposit balances, high interest rates, business streamlining efforts and a strong balance sheet.
Analysts seem optimistic regarding the company’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for INBK’s earnings has been revised 14.3% and 17.6% upward for 2023 and 2024, respectively. The stock presently sports a Zacks Rank #1 (Strong Buy).
Shares of the company have surged 72.5% in the past three months, outperforming the industry’s 14.4% rally by a considerable margin.
Image Source: Zacks Investment Research
Some factors that make First Internet Bancorp an attractive pick right now.
Earnings Growth: In the last three-five years, INBK witnessed earnings growth of 13.6%, higher than the industry average of 12.3%. While the company’s earnings are projected to decline 67.6% this year amid a tough operating backdrop, the trend will likely reverse in the future. In 2024, earnings are projected to jump 122.1%.
Revenue Strength: The company’s revenues witnessed a CAGR of 13.6% over the four-year period ended 2022. The improvement was driven by solid loan and deposit balance and efforts to bolster fee income. Also, since 2022, higher interest rates have aided INBK’s top line.
Additionally, in January, First Internet Bancorp announced plans to exit its consumer mortgage business on the back of a sharp fall in mortgage volumes “and the negative outlook for mortgage lending over the next several years.” This included the company’s nationwide digital direct-to-consumer mortgage platform as well as its local traditional consumer mortgage and construction-to-permanent business. This move is likely to lower total non-interest expenses by almost $6.8 million annually.
Though the above-mentioned business restructuring effort will support long-term growth, revenues are likely to be affected in the near term. The top line is expected to decline 17.6% in 2023 before rebounding and growing 13.1% next year.
Steady Capital Deployments: First Internet Bancorp has been paying quarterly dividend of 6 cents per share. The company has a share repurchase program in place. In December 2022, it announced a new share buyback plan, authorizing up to $25 million worth of shares. The plan expires on Dec 31, 2023. Under this program, INBK repurchased 411,188 shares through Jun 30, 2023, for $7.8 million. Given the earnings strength, the company’s capital deployment activities seem sustainable and will enhance shareholder value.
Favorable Valuation: First Internet Bancorp stock looks undervalued right now with respect to its price-to-book (P/B) and price-to-sales (P/S) ratios. It has a P/B ratio of 0.53, lower than the industry average of 0.91. Also, the company’s P/S ratio of 0.84 is below the industry average of 1.80.
INBK 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.
Other Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are Live Oak Bancshares, Inc. (LOB - Free Report) and Popular, Inc. (BPOP - Free Report) .
Live Oak Bancshares currently sports a Zacks Rank #1. Earnings estimates for 2023 have been revised 19.7% north over the past 30 days. In the past three months, LOB’s shares have surged 49.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Popular have been revised 10.5% north for 2023 over the past 30 days. Shares of BPOP have rallied 13.1% in the past three months. Currently, the company carries a Zacks Rank #2.