Despite the coronavirus-related crisis, it seems to be a wise idea to add Southern Missouri Bancorp, Inc. (SMBC - Free Report) to your portfolio at the moment. The company’s strong fundamentals and prospects keep us encouraged. Further, the bank’s efforts to expand inorganically are commendable.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised 6% upward over the past 30 days. It currently carries a Zacks Rank #2 (Buy).
Over the past six months, shares of Southern Missouri Bancorp have lost 21.2% compared with the industry’s decline of 6.1%.
There are some other factors mentioned below that make Southern Missouri Bancorp an attractive investment option now.
Earnings Strength: Over the last three to five years, the company witnessed earnings growth of 14.13%, higher than the industry average of 12.52%. While earnings are expected to decline 11.7% in 2020 due to the current economic slowdown, the company has a decent earnings surprise history, having surpassed estimates in two of the trailing quarters, with the average beat being 11.5%.
Revenue Growth: Southern Missouri Bancorp’s revenues witnessed a CAGR of 15.3% over the last five years (2015-2019). The uptrend in revenues is expected to continue in the near term. The top line is projected to increase 7.2% in 2020.
Solid Inorganic Growth Strategies: The company’s capital strength has been helping it to grow inorganically. As part of this strategy, the company completed the merger with Central Federal Bancshares in May 2020. The deal is expected to be accretive to earnings per share within six months of closing.
Strong Leverage: The company’s debt/equity ratio is 0.55, marginally lower than the industry’s average debt/equity ratio of 0.57. This reflects that the company will be financially stable even during adverse economic situations.
Steady Capital-Deployment Activities: The company remains committed to enhancing shareholder value. Notably, it has been raising the quarterly common stock dividend every year since 2012, with the last hike announced in May 2019. Also, it has a share buyback program in place, which is temporarily suspended due to the coronavirus pandemic.
Superior Return on Equity (ROE): Southern Missouri Bancorp’s ROE of 11.15% compares favorably with the industry average of 7.43%. This highlights the company’s commendable position over its peers in using shareholders’ funds.
Other Stocks to Consider
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E*TRADE Financial Corporation (ETFC - Free Report) has been witnessing upward estimate revisions for the past 60 days. Further, the company’s shares have gained 47.6% in the past six months. At present, it carries a Zacks Rank of 2 (Buy).
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