Improving operating backdrop, rising rate environment, expectations of lesser regulations and strengthening of the domestic economy are expected to continue supporting banking stocks. Keeping this in mind, we have selected Lakeland Financial Corporation (LKFN - Free Report) for your consideration.
Lakeland Financial has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 60 days, the Zacks Consensus Estimate for current-year earnings has been revised nearly 1% upward.
Further, this Zacks Rank #2 (Buy) stock has gained around 5.2% in the past year, outperforming 5.1% growth of the industry it belongs to.
Why Lakeland Financial is a Must Buy
Revenue Strength: Lakeland Financial’s revenues recorded a compound annual growth rate (CAGR) of 7.6% over the last four years (2013-2016). Further, the top line is expected to grow 14.4% in 2017, higher than the industry average of 3.1%.
Impressive Balance Sheet Growth: The company’s loans and deposits have witnessed a CAGR of 11% and 12%, respectively, over a four-year period (ended 2016). This makes the company well poised for opportunistic expansions in the future.
Earnings Growth: Lakeland Financial witnessed earnings growth of 10.1% in the last three to five years. This earnings momentum is likely to continue in the near term as reflected by the company’s projected earnings per share (EPS) growth rate (F1/F0) of 16.3%.
Further, the company’s long-term (three to five years) estimated EPS growth rate of 10% promises rewards for investors in the long run. Also, it recorded an average positive earnings surprise of 5.5% over the trailing four quarters.
Improving Credit Quality: The company’s credit quality has improved significantly over the years. In 2016, non-performing loans declined nearly 72% from the 2013 level. Also, the ratio of net charge offs to average loans came in at 0.03% compared with 0.11% in 2013.
Strong Leverage: Lakeland Financial’s debt/equity ratio is valued at 0.07 compared with the industry average of 0.45. The relatively strong financial health of the company will help it perform better under a dynamic business environment compared with its peers.
Superior Return on Equity (ROE): Lakeland Financial has a ROE of 13.33% compared with the industry average of 9.42%. This reflects the company’s superiority in utilizing shareholders’ funds.
Other Stocks to Consider
Federated Investors (FII - Free Report) witnessed a 3.4% upward estimate revision for current-year earnings, over the last 60 days. In six months’ time, the company’s share price has been up more than 25%. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Enterprise Financial Services Corporation (EFSC - Free Report) witnessed a 1.2% upward estimate revision for current-year earnings, over the last 60 days. Additionally, the stock has gained 5% over the past six months. It currently carries a Zacks Rank of 2.
Old Second Bancorp’s (OSBC - Free Report) current-year earnings estimates have been revised 12.5% upward in the last 60 days. Also, the company’s shares have risen 3.3% in the past six months. It holds a Zacks Rank of 2, at present.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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