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6 Reasons That Make Old Second Bancorp an Attractive Pick
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Old Second Bancorp (OSBC - Free Report) has grown organically and inorganically over the years on the back of its strong capital position. Improving credit quality is another positive factor. Further, the bank’s cost-control initiatives are impressive.
Given the strong fundamentals, shares of Old Second Bancorp have gained 24.9% year to date, versus the industry’s decline of 5.8%.
Also, the Zacks Consensus Estimate for its current-year earnings has been revised 12.5% upward, over the past 60 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Key Driving Forces
Solid Inorganic Growth Strategies: Old Second Bancorp’s capital strength has been helping it to grow inorganically. As part of this strategy, the company acquired the Chicago branch of Talmer Bank and Trust in October 2016. The deal helped the bank expand its presence in Chicago and raised its loan and deposit balances.
Prudent Expense Management: The Aurora, IL-based lender has been successful in reducing expenses at a CAGR of 7.1% over the last four years (ended 2016), with the help of branch closures and staff reductions. Such cost management initiatives will support the bank’s bottom-line growth.
Improved Credit Quality: Old Second Bancorp’s credit quality has improved significantly over the years. In 2016, net-charge offs and non-performing assets declined nearly 71% and 66%, respectively, from the 2013 levels.
Earnings per Share Growth: Old Second Bancorp has recorded an earnings growth rate of 16.6% over the last three to five years compared with 7.4% for the industry.
Further, the company’s long term (three to five years) estimated EPS growth rate of 7% promises rewards for investors in the long run. Also, it recorded an average positive earnings surprise of 24.7% over the trailing four quarters.
Superior Return on Equity (ROE): Old Second Bancorp has a ROE of 12.34% compared with the industry average of 9.42%. This reflects the company’s superiority in utilizing shareholders’ funds.
Stock Looks Undervalued: The stock currently has a Value Score of B. Also, it looks undervalued with respect to its price-to-earnings (F1) and price-to-sales ratios. The company’s trailing 12-month P/E and P/S ratios of 16.85 and 3.48, respectively, are below the industry averages of 17.68 and 3.51.
Earnings estimates for Hancock Holding have been revised slightly upward for the current year over the last 60 days. Its share price has increased 17.7% year to date.
Preferred Bank’s earnings estimates have been revised 3.4% upward for the current year over the last 60 days. Its shares have gained more than 18% so far this year.
FS Bancorp’s Zacks Consensus Estimate for current-year earnings has been revised 2.4% up in the last 60 days. So far this year, its share price has increased nearly 31%.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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6 Reasons That Make Old Second Bancorp an Attractive Pick
Old Second Bancorp (OSBC - Free Report) has grown organically and inorganically over the years on the back of its strong capital position. Improving credit quality is another positive factor. Further, the bank’s cost-control initiatives are impressive.
Given the strong fundamentals, shares of Old Second Bancorp have gained 24.9% year to date, versus the industry’s decline of 5.8%.
Also, the Zacks Consensus Estimate for its current-year earnings has been revised 12.5% upward, over the past 60 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Key Driving Forces
Solid Inorganic Growth Strategies: Old Second Bancorp’s capital strength has been helping it to grow inorganically. As part of this strategy, the company acquired the Chicago branch of Talmer Bank and Trust in October 2016. The deal helped the bank expand its presence in Chicago and raised its loan and deposit balances.
Prudent Expense Management: The Aurora, IL-based lender has been successful in reducing expenses at a CAGR of 7.1% over the last four years (ended 2016), with the help of branch closures and staff reductions. Such cost management initiatives will support the bank’s bottom-line growth.
Improved Credit Quality: Old Second Bancorp’s credit quality has improved significantly over the years. In 2016, net-charge offs and non-performing assets declined nearly 71% and 66%, respectively, from the 2013 levels.
Earnings per Share Growth: Old Second Bancorp has recorded an earnings growth rate of 16.6% over the last three to five years compared with 7.4% for the industry.
Further, the company’s long term (three to five years) estimated EPS growth rate of 7% promises rewards for investors in the long run. Also, it recorded an average positive earnings surprise of 24.7% over the trailing four quarters.
Superior Return on Equity (ROE): Old Second Bancorp has a ROE of 12.34% compared with the industry average of 9.42%. This reflects the company’s superiority in utilizing shareholders’ funds.
Stock Looks Undervalued: The stock currently has a Value Score of B. Also, it looks undervalued with respect to its price-to-earnings (F1) and price-to-sales ratios. The company’s trailing 12-month P/E and P/S ratios of 16.85 and 3.48, respectively, are below the industry averages of 17.68 and 3.51.
Other Stocks to Consider
Some top-ranked stocks in the same space are Hancock Holding Company , Preferred Bank (PFBC - Free Report) and FS Bancorp (FSBW - Free Report) . All these stocks hold a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings estimates for Hancock Holding have been revised slightly upward for the current year over the last 60 days. Its share price has increased 17.7% year to date.
Preferred Bank’s earnings estimates have been revised 3.4% upward for the current year over the last 60 days. Its shares have gained more than 18% so far this year.
FS Bancorp’s Zacks Consensus Estimate for current-year earnings has been revised 2.4% up in the last 60 days. So far this year, its share price has increased nearly 31%.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>