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5 Reasons Why Unity Bancorp (UNTY) Stock Is Worth Betting On
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Unity Bancorp, Inc. (UNTY - Free Report) stock is well-poised to capitalize on its strong fundamentals, decent loan and deposit balances and diversified fee-income sources.
Analysts seem optimistic about the company’s earnings potential. Over the past 60 days, the Zacks Consensus Estimate for UNTY’s earnings has been revised 1.7% upward for 2023. The stock presently carries a Zacks Rank #2 (Buy).
Over the past three months, shares of the company have risen 12.4% compared with the industry's growth of 15.3%.
Image Source: Zacks Investment Research
Factors That Make UNTY Stock an Attractive Investment Option
Earnings Growth: In the past three to five years, Unity Bancorp witnessed earnings growth of 18.4%, which is higher than the industry’s growth of 12.3%. The momentum is expected to continue in the near term. The bank’s earnings are projected to rise 1.4% this year and 3.7% in 2024.
Further, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 2.51%.
Revenue Strength: UNTY’s net revenues witnessed a CAGR of 13.5% over the last three years (ended 2022). The improvement was largely driven by decent loan and deposit balances and diversified fee income sources. Also, the company has been expanding its presence by opening new branches.
Unity Bancorp’s revenues are expected to grow 2.7% in 2023 and 4% in 2024.
Steady Capital Deployments: Unity Bancorp has been increasing its quarterly dividend regularly. The last dividend hike of 9% to 12 cents per share was announced this February. The company has raised its quarterly dividend five times in the last five years. It has five-year annualized dividend growth of 12.2%. Currently, the company's payout ratio is 13% of earnings.
Unity Bancorp has a share repurchase program in place. This April, it announced a new share repurchase plan, under which it may buy back up to 500,000 shares. Earlier in February 2021, a share buyback plan authorizing 750,000 shares was announced. As of Jun 30, 2023, 507,000 shares remained under the authorization.
Given the earnings strength, the company’s capital deployment activities seem sustainable and will enhance shareholder value.
Superior Return on Equity (ROE): UNTY currently has an ROE of 16.72%, higher than the industry’s average of 11.81%. This shows that the company reinvests its cash more efficiently than its peers.
Favorable Valuation: Unity Bancorp stock looks undervalued right now with respect to its price-to-cash flow (P/CF) and price-to-earnings (P/E) (F1) ratios. It has a P/CF ratio of 6.76, lower than the industry’s average of 8.89. Also, the company’s P/E (F1) ratio of 6.29 is below the industry’s average of 6.91.
UNTY has a Value Score of B. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Other Bank Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are Bank7 (BSVN - Free Report) and First Community Bankshares, Inc. (FCBC - Free Report) .
The Zacks Consensus Estimate for Bank7's current-year earnings has been revised 7.4% upward over the past 30 days. Its shares have risen 11.4% in the past three months. Currently, BSVN carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
First Community Bankshares also carries a Zacks Rank #2 at present. Earnings estimates for 2023 have remained unchanged over the past 30 days. In the past three months, FCBC shares have rallied 25.9%.
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5 Reasons Why Unity Bancorp (UNTY) Stock Is Worth Betting On
Unity Bancorp, Inc. (UNTY - Free Report) stock is well-poised to capitalize on its strong fundamentals, decent loan and deposit balances and diversified fee-income sources.
Analysts seem optimistic about the company’s earnings potential. Over the past 60 days, the Zacks Consensus Estimate for UNTY’s earnings has been revised 1.7% upward for 2023. The stock presently carries a Zacks Rank #2 (Buy).
Over the past three months, shares of the company have risen 12.4% compared with the industry's growth of 15.3%.
Image Source: Zacks Investment Research
Factors That Make UNTY Stock an Attractive Investment Option
Earnings Growth: In the past three to five years, Unity Bancorp witnessed earnings growth of 18.4%, which is higher than the industry’s growth of 12.3%. The momentum is expected to continue in the near term. The bank’s earnings are projected to rise 1.4% this year and 3.7% in 2024.
Further, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 2.51%.
Revenue Strength: UNTY’s net revenues witnessed a CAGR of 13.5% over the last three years (ended 2022). The improvement was largely driven by decent loan and deposit balances and diversified fee income sources. Also, the company has been expanding its presence by opening new branches.
Unity Bancorp’s revenues are expected to grow 2.7% in 2023 and 4% in 2024.
Steady Capital Deployments: Unity Bancorp has been increasing its quarterly dividend regularly. The last dividend hike of 9% to 12 cents per share was announced this February. The company has raised its quarterly dividend five times in the last five years. It has five-year annualized dividend growth of 12.2%. Currently, the company's payout ratio is 13% of earnings.
Unity Bancorp has a share repurchase program in place. This April, it announced a new share repurchase plan, under which it may buy back up to 500,000 shares. Earlier in February 2021, a share buyback plan authorizing 750,000 shares was announced. As of Jun 30, 2023, 507,000 shares remained under the authorization.
Given the earnings strength, the company’s capital deployment activities seem sustainable and will enhance shareholder value.
Superior Return on Equity (ROE): UNTY currently has an ROE of 16.72%, higher than the industry’s average of 11.81%. This shows that the company reinvests its cash more efficiently than its peers.
Favorable Valuation: Unity Bancorp stock looks undervalued right now with respect to its price-to-cash flow (P/CF) and price-to-earnings (P/E) (F1) ratios. It has a P/CF ratio of 6.76, lower than the industry’s average of 8.89. Also, the company’s P/E (F1) ratio of 6.29 is below the industry’s average of 6.91.
UNTY has a Value Score of B. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Other Bank Stocks Worth a Look
A couple of other top-ranked stocks from the banking space are Bank7 (BSVN - Free Report) and First Community Bankshares, Inc. (FCBC - Free Report) .
The Zacks Consensus Estimate for Bank7's current-year earnings has been revised 7.4% upward over the past 30 days. Its shares have risen 11.4% in the past three months. Currently, BSVN carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
First Community Bankshares also carries a Zacks Rank #2 at present. Earnings estimates for 2023 have remained unchanged over the past 30 days. In the past three months, FCBC shares have rallied 25.9%.