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Home BancShares (HOMB) Surges 6.4%: Is This an Indication of Further Gains?

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Home BancShares (HOMB - Free Report) shares rallied 6.4% in the last trading session to close at $22.38. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3.8% loss over the past four weeks.

The announcement of the all-stock merger deal with Happy Bancshares drove Home Bancshares’ stock higher in last day’s trading session. Home Bancshares has agreed to acquire Happy Bancshares for $919 million, thus expanding into the high growth Texas markets.

The deal, expected to close early in the first quarter of 2022, is projected to be immediately accretive to earnings per share by 5.5% and 9.2% in 2022 and 2023, respectively. In fact, post deal closure, Home BancShares will continue to have a robust capital position along with an improved operating profile. The merger will create a bank which will be positioned amongst the 75 largest banks in the United States.

Price and Consensus

Price Consensus Chart for HOMB

This bank holding company is expected to post quarterly earnings of $0.45 per share in its upcoming report, which represents a year-over-year change of -4.3%. Revenues are expected to be $167.93 million, down 4.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Home BancShares, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on HOMB going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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