First Business Financial Services, Inc. (FBIZ Quick QuoteFBIZ - Free Report) stock is a good investment option right now, supported by its earnings growth, revenue strength and strong balance sheet. Its steady capital deployment activities aimed at enhancing shareholder value are another positive.

The Zacks Consensus Estimate for FBIZ's 2023 earnings has been revised marginally upward over the past seven days. This shows that analysts are optimistic regarding the company’s earnings growth prospects. FBIZ currently carries a Zacks Rank #2 (Buy).

Over the past three months, shares of the company have gained 18.1% compared with the industry's upside of 5.8%.

Image Source: Zacks Investment Research

Mentioned below are a few factors that make FBIZ stock a rewarding investment pick now:

Earnings Growth: In the last three to five years, First Business witnessed earnings per share growth of 24.1% compared with the industry’s average of 10.3%. Though the company’s earnings are projected to decline 9.7% in 2023, the same is expected to rise 6.9% in 2024.

FBIZ has a decent earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters, with the average surprise being 5.53%.

Revenue Strength: First Business’ net revenues witnessed a compound annual growth rate (CAGR) of 11.1% over the last three years (2019-2022), with the trend continuing in the first half of 2023. The improvement was backed by a strong loan and lease balance. Total loans and leases witnessed a CAGR of 12.6% for the three years ended 2022.

With decent loan growth and efforts to improve fee income, the company's top line is expected to keep improving. Revenues are expected to grow 11.3% in 2023 and 6.2% in 2024.

Superior Return on Equity (ROE): The company has a trailing 12-month ROE of 15.24%, which compares favorably with 13.55% of the industry. This reflects that it is more efficient in using shareholder funds than its peers.

Steady Capital Deployments: Given FBIZ's solid financial position, its capital deployments seem sustainable. The company has been consistent with its dividend payments. In July 2023, FBIZ announced a dividend of 23 cents per share. Moreover, it has increased its quarterly dividend five times in the last five years and its five-year annualized dividend growth rate is 10.13%.

In January 2023, FBIZ announced a new stock repurchase program, authorizing it to buyback up to $5 million through Jan 31, 2024. As of Jun 30, 2023, the company repurchased 65,112 shares for approximately $2 million and had 101,729 shares left under the authorization. Such strategic moves enhance shareholders’ value and boost investors’ confidence in the stock.

Valuation Favorable: The stock looks undervalued right now, with respect to its price-to-sales (P/S) and price-to-earnings (P/E) ratios. It has a P/S ratio of 1.42, which is below the industry's average of 1.87. Moreover, its P/E (F1) ratio of 7.58 compares slightly favorably with the industry’s 7.73.

The stock 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 Quick QuoteBSVN - Free Report) and First Community Bankshares, Inc. (FCBC Quick QuoteFCBC - Free Report) .

The Zacks Consensus Estimate for Bank7's current-year earnings has been revised 2.8% upward over the past 30 days. Its shares have gained 10.1% 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 15%.