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Here's Why Northrim BanCorp (NRIM) Stock is a Must Buy Now
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It seems to be a wise idea to add Northrim BanCorp, Inc. (NRIM - Free Report) stock to your portfolio now, given the strength in the company’s fundamentals and solid prospects. Moreover, a strong balance sheet position keeps it well poised for growth.
Analysts are also bullish on the stock. Over the past 60 days, the Zacks Consensus Estimate for earnings has moved 7.8% upward for 2024. The company currently sports a Zacks Rank #1 (Strong Buy).
Shares of NRIM have rallied 21.1% over the past six months, outperforming the industry's 20.3% growth.
Image Source: Zacks Investment Research
Factors That Make NRIM Stock a Solid Pick
Earnings Growth: Over the last three to five years, Northrim BanCorp recorded earnings growth of 14.1%, higher than the industry average of 11%. This momentum is likely to continue in the near term, indicated by the projected earnings growth rate of 11.4% for 2024 and 5% in 2025.
Revenue Strength: NRIM’s total revenues witnessed a CAGR of 6.8% over the last five years (ended 2023). This uptick primarily resulted from the steady rise in net interest income on the back of higher rates since 2022. Also, loans and deposit balance continued to rise. In the last five years, loans and deposits recorded a CAGR of 13% and 15%, respectively.
Though the Federal Reserve has signaled rate cuts this year, the interest rates are expected to remain high in the near term. This, along with strong loans and deposit balance, will keep supporting Northrim BanCorp’s top line despite rising deposit costs weighing on it.
The company’s revenues are expected to grow at the rate of 6.8% and 4.7% in 2024 and 2025, respectively.
Solid Balance Sheet Position: As of Dec 31, 2023, Northrim BanCorp had a total debt worth $24 million. With a cash & cash equivalents balance of $27.5 million, the company currently carries a relatively lesser credit risk, and chances of its default in debt payments are low, even if the economic situation worsens.
Impressive Capital Distributions: NRIM has been increasing quarterly dividends on a regular basis. In the past five years, the company hiked its dividend nine times, with the last one announced this January. Based on the last day’s closing price of $49.09, its dividend yield currently stands at 4.97%. Further, over the past five years, the company’s annualized dividend growth is 17.2%.
Additionally, NRIM has a share repurchase plan in place. Announced in January 2024, the program authorized the buyback of 0.11 million shares. Notably, since 2018, it has repurchased more than 1.5 million shares.
Given the earnings strength and solid balance sheet position, its capital distributions are likely to be sustainable going forward.
Strong Leverage: The company’s debt/equity ratio is valued at 0.1 compared with the industry average of 0.28, indicating a relatively lower debt burden. It highlights the financial stability of the company even in adverse economic conditions.
Stock Looks Undervalued: NRIM stock has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount.
The Zacks Consensus Estimate for HWC’s 2024 earnings has been revised marginally north over the past 30 days. Over the past six months, shares of Hancock Whitney have risen 25.7%.
The Zacks Consensus Estimate for GABC’s current-year earnings has remained unchanged over the past 30 days. German American Bancorp’s shares have risen 23.5% over the past six months.
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Here's Why Northrim BanCorp (NRIM) Stock is a Must Buy Now
It seems to be a wise idea to add Northrim BanCorp, Inc. (NRIM - Free Report) stock to your portfolio now, given the strength in the company’s fundamentals and solid prospects. Moreover, a strong balance sheet position keeps it well poised for growth.
Analysts are also bullish on the stock. Over the past 60 days, the Zacks Consensus Estimate for earnings has moved 7.8% upward for 2024. The company currently sports a Zacks Rank #1 (Strong Buy).
Shares of NRIM have rallied 21.1% over the past six months, outperforming the industry's 20.3% growth.
Image Source: Zacks Investment Research
Factors That Make NRIM Stock a Solid Pick
Earnings Growth: Over the last three to five years, Northrim BanCorp recorded earnings growth of 14.1%, higher than the industry average of 11%. This momentum is likely to continue in the near term, indicated by the projected earnings growth rate of 11.4% for 2024 and 5% in 2025.
Revenue Strength: NRIM’s total revenues witnessed a CAGR of 6.8% over the last five years (ended 2023). This uptick primarily resulted from the steady rise in net interest income on the back of higher rates since 2022. Also, loans and deposit balance continued to rise. In the last five years, loans and deposits recorded a CAGR of 13% and 15%, respectively.
Though the Federal Reserve has signaled rate cuts this year, the interest rates are expected to remain high in the near term. This, along with strong loans and deposit balance, will keep supporting Northrim BanCorp’s top line despite rising deposit costs weighing on it.
The company’s revenues are expected to grow at the rate of 6.8% and 4.7% in 2024 and 2025, respectively.
Solid Balance Sheet Position: As of Dec 31, 2023, Northrim BanCorp had a total debt worth $24 million. With a cash & cash equivalents balance of $27.5 million, the company currently carries a relatively lesser credit risk, and chances of its default in debt payments are low, even if the economic situation worsens.
Impressive Capital Distributions: NRIM has been increasing quarterly dividends on a regular basis. In the past five years, the company hiked its dividend nine times, with the last one announced this January. Based on the last day’s closing price of $49.09, its dividend yield currently stands at 4.97%. Further, over the past five years, the company’s annualized dividend growth is 17.2%.
Additionally, NRIM has a share repurchase plan in place. Announced in January 2024, the program authorized the buyback of 0.11 million shares. Notably, since 2018, it has repurchased more than 1.5 million shares.
Given the earnings strength and solid balance sheet position, its capital distributions are likely to be sustainable going forward.
Strong Leverage: The company’s debt/equity ratio is valued at 0.1 compared with the industry average of 0.28, indicating a relatively lower debt burden. It highlights the financial stability of the company even in adverse economic conditions.
Stock Looks Undervalued: NRIM stock has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount.
Other Banks Worth Considering
A couple of other top-ranked stocks from the banking space are Hancock Whitney (HWC - Free Report) and German American Bancorp (GABC - Free Report) . At present, HWC sports a Zacks Rank #1, and GABC has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HWC’s 2024 earnings has been revised marginally north over the past 30 days. Over the past six months, shares of Hancock Whitney have risen 25.7%.
The Zacks Consensus Estimate for GABC’s current-year earnings has remained unchanged over the past 30 days. German American Bancorp’s shares have risen 23.5% over the past six months.