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Bull of the Day: Carolina Financial (CARO)

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Leading the way after Election Day, financials did very well. Out of the gate, anticipation of favorable business conditions and a rising rate environment helped out domestic banks. Things cooled down a bit in the spring but here in the summer it looks like the financials are back in full swing. I dug up an idea here for the Bull of the Day which is a smaller financial company you may not have heard of. 

Carolina Financial (CARO - Free Report) operates as a bank holding company for CresCom Bank that provides a range of commercial and retail banking financial services in South Carolina and North Carolina. The company operates in Community Banking and Wholesale Mortgage Banking segments. It offers checking accounts, commercial accounts, savings accounts, money market accounts, retirement accounts, longer-term certificates of deposit, noninterest-bearing demand accounts, and interest-bearing demand accounts to individuals, businesses, associations, organizations, and governmental authorities. 

The big story here for Carolina Financial is the revenue and earnings growth estimates. This year Carolina Financial is slated to generate 31.46% revenue growth. That’s not a one-off either as next year the revenue growth is estimated to be 55.86%. Translated over to EPS growth, the company is looking for 13.72% growth this year and 15.82% next year.

Analysts have been increasing their earnings estimates for Carolina Financial. The bullish revisions have pushed our Zacks Consensus Estimate for the current year from $1.79 to $1.87. Next year’s number has gone up from $2.03 to $2.16 as a result of the recent revisions.

The stock has been on a pretty good run as of late, leapfrogging the 50-day moving average in late April of this year. That 50-day has provided support during this most recent run. Shares came down to test the 50-day in late May, then again in June. Following a big spike up to the high $34s the stock has been consolidating near the highs. Support now sits down at $32.48.

A big technical factor in this picture is the Chaikin Money Flow, The CMF has been above the zero line since the move began in April. That implies major accumulation in the stock and serves to confirm the current bullish trend.

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