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Great Western Bancorp (GWB) Moves 11.9% Higher: Will This Strength Last?

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Great Western Bancorp (GWB - Free Report) shares soared 11.9% in the last trading session to close at $32. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8% loss over the past four weeks.

The announcement of the all-stock merger deal worth $2 billion with First Interstate BancSystem drove Great Western Bancorp’s stock higher in last day’s trading session. Per the deal, Great Western Bancorp will merge into First Interstate and the resulting firm will operate under the First Interstate name and brand.

The transaction is expected to be 20% accretive to First Interstate’s earnings per share in 2023, assuming the fully phased-in cost synergies. Following the merger, Great Western Bancorp will be able to offer its customers access to additional branch locations and new products and services, while delivering additional returns to shareholders.

This holding company for Great Western Bank is expected to post quarterly earnings of $0.76 per share in its upcoming report, which represents a year-over-year change of +280%. Revenues are expected to be $111.99 million, up 9.7% 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 Great Western Bancorp, 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 GWB 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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