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Macatawa (MCBC) Surges 5.1%: Is This an Indication of Further Gains?

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Macatawa Bank (MCBC - Free Report) shares ended the last trading session 5.1% higher at $11.44. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 11% gain over the past four weeks.

Shares of Macatawa Bank rallied for the third consecutive day and touched a 52-week high of $11.91.  The Federal Reserve has signaled end of the current rate cycle and kept the interest rates unchanged at 22-year high of 5.25-5.5% at the end of two-day FOMC meeting. The central bank also indicated three interest rate cuts by 2024-end.

These favorable developments turned investor sentiments bullish on bank stocks as high funding costs being faced by the industry players will somewhat come down next year. This will support net interest income and margin growth. Hence, the MCBC stock moved higher.

This holding company for Macatawa Bank is expected to post quarterly earnings of $0.32 per share in its upcoming report, which represents a year-over-year change of -8.6%. Revenues are expected to be $26.9 million, down 3.6% 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 Macatawa, 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 MCBC going forward to see if this recent jump can turn into more strength down the road.

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

Macatawa is a member of the Zacks Banks - Midwest industry. One other stock in the same industry, Lakeland Financial (LKFN - Free Report) , finished the last trading session 0.8% lower at $65.54. LKFN has returned 17.4% over the past month.

For Lakeland Financial, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.88. This represents a change of -12.9% from what the company reported a year ago. Lakeland Financial currently has a Zacks Rank of #3 (Hold).

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