Underlying strength and healthy long-term prospects make Wilmington, DE-based The Bancorp, Inc. (TBBK - Free Report) a solid bet now. Also, decent loan demand and a strong balance sheet position bode well for the future.
Further, analysts are bullish on the stock. The Zacks Consensus Estimate for earnings has moved 10.3% and 8% upward over the past 60 days for 2020 and 2021, respectively. Currently, the stock carries a Zacks Rank #2 (Buy).
Shares of The Bancorp have gained 2.4% over the past six months against the industry’s 10% fall.
Here are the factors that make The Bancorp an attractive investment pick right now:
Earnings Strength: Over the past three to five years, The Bancorp has recorded earnings growth of 42.7%, significantly higher than the industry average of 11.2%. The momentum is expected to continue in the near term. The bank’s earnings are projected to grow at a rate of 21.7% and 15.1% for 2020 and 2021, respectively.
Further, the company has an impressive earnings surprise history. Its earnings have outpaced the Zacks Consensus Estimate in three of the trailing four quarters, with the average positive surprise being 16.32%.
Revenue Growth: The Bancorp’s net revenues have witnessed a CAGR of 4.9% over the last five years (2015-2019). This top-line improvement was backed by strong loan and deposit balance, along with diversified fee income sources. The trend is likely to continue for the next couple of years, with revenues expected to grow 12.8% in 2020 and 13.2% in 2021.
Strong Balance Sheet Position: As of Jun 30, 2020, The Bancorp had total debt of $54.1 million, which was significantly lower than the cash and cash equivalent balance of $480.7 million. Further, the company’s times interest earned of 28.1 and total debt/total capital of 9.2% improved sequentially at the end of second-quarter 2020.
Additionally, The Bancorp’s debt/equity ratio of 0.10 compares favorably with the industry average of 0.36, thereby reflecting the company’s relatively strong financial health. Thus, we believe that it will perform better than peers in an unstable business environment.
Superior Return on Equity (ROE): The Bancorp’s t trailing 12-month ROE highlights its growth potential. The company's ROE of 13.07% compares unfavorably with 8.43% for the industry, underlining that it is more efficient in using shareholder funds than peers.
Stock Seems Undervalued: The Bancorp looks undervalued, with respect to price/earnings (P/E) (F1) and price/cashflow (P/CF) ratios. It has a P/E (F1) ratio of 7.67, which is below the industry average of 11.17. Also, its P/CF ratio of 6.47 is lower than the industry average of 7.76.
Other Bank Stocks Worth a Look
Bryn Mawr Bank Corporation’s (BMTC - Free Report) earnings estimates for 2020 have moved up 50.5% over the past 60 days. The company’s shares have lost 33.7% so far this year. At present, it sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mid Penn Bancorp’s (MPB - Free Report) earnings estimates for the current year have moved 24.3% upward over the past 60 days. The stock has declined 33.9% year to date. The company currently sports a Zacks Rank #1.
Community Bank System, Inc.’s (CBU - Free Report) earnings estimates for 2020 have increased 5% over the past 60 days. Further, so far this year, the company’s shares have declined 15.6%. At present, it has a Zacks Rank #2.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Click Here, See It Free >>