Shares of First Business Financial Services (
FBIZ Quick Quote FBIZ - Free Report) have been strong performers lately, with the stock up 0.4% over the past month. The stock hit a new 52-week high of $29.61 in the previous session. First Business Financial Services has gained 58.6% since the start of the year compared to the 24.6% move for the Zacks Finance sector and the 16.7% return for the Zacks Banks - Midwest industry. What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 28, 2021, First Business Financial Services reported EPS of $1.07 versus consensus estimate of $0.88.
For the current fiscal year, First Business Financial Services is expected to post earnings of $3.93 per share on $112.33 million in revenues. This represents a 99.49% change in EPS on an 8% change in revenues. For the next fiscal year, the company is expected to earn $3.21 per share on $116 million in revenues. This represents a year-over-year change of -18.32% and 3.26%, respectively.
First Business Financial Services may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
First Business Financial Services has a Value Score of A. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 7.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 12.2X versus its peer group's average of 10.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, First Business Financial Services currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if First Business Financial Services meets the list of requirements. Thus, it seems as though First Business Financial Services shares could have a bit more room to run in the near term.
How Does First Business Financial Services Stack Up to the Competition?
Shares of First Business Financial Services have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Independent Bank (
IBCP Quick Quote IBCP - Free Report) , First Financial Bancorp. ( FFBC Quick Quote FFBC - Free Report) , and Wintrust Financial ( WTFC Quick Quote WTFC - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 8% of all the industries we have in our universe, so it looks like there are some nice tailwinds for First Business Financial Services, even beyond its own solid fundamental situation.