Improving operating backdrop, a rising rate environment and easing of regulations along with the strengthening of domestic economy should keep supporting the performance of banking stocks. So, we bring one such stock — Old National Bancorp (ONB - Free Report) — that continues to indicate strong fundamentals and improving prospects.
The stock has witnessed upward estimate revisions. The Zacks Consensus Estimate has moved marginally upward for 2018 and 2019, over the last 60 days. As a result, the stock currently carries a Zacks Rank #2 (Buy).
Also, the stock has rallied 12.5% in the past three months, outperforming the industry’s rise of 9.3%.
Why Old National Bancorp Stock is an Attractive Pick
Inorganic growth strategy: Old National Bancorp has been growing through acquisitions. In June 2018, the bank announced a deal to acquire Minnesota-based Klein Financial, Inc. for roughly $434 million. Upon expected closure in fourth-quarter 2018, this transaction will be 6.2% accretive to 2020 earnings.
Additionally, over the past several years, Old National Bancorp has been expanding inorganically. These efforts have supported the bank’s financials amid a tough economic backdrop. With the strong balance sheet position, the company will likely continue undertaking such opportunistic deals.
Earnings growth: Old National Bancorp witnessed a 2.2% rise in earnings per share in the last three to five years. This earnings momentum will likely continue in the near term, as reflected by the company’s projected earnings growth of 15.5% for 2018 and 14.4% for 2019.
Also, Old National Bancorp has a decent earnings surprise history. The bank delivered an average positive earnings surprise of 8% in the trailing four quarters.
Further, the company’s long-term (three-five years) estimated EPS growth rate of 8.0% promises rewards for investors in the long run.
Revenue strength: Old National Bancorp’ net revenues have seen a compounded annual growth rate of 6.5% over the last five years (2013-2017). The top-line improvement was backed by strong loan and deposit growth. Further, higher interest rates will continue supporting revenues.
The company’s projected sales growth rates of 12.5% and 4.3% for 2018 and 2019, respectively,
ensure continuation of the upward revenue trend.
Stock seems undervalued: Old National Bancorp seems undervalued when compared with the broader industry. Its current price-to-earnings (F1) and price-book ratios are lower than the respective industry averages.
Favorable VGM Score: Old National Bancorp has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Other Stocks Worth Considering
Civista Bancshares, Inc.’s (CIVB - Free Report) earnings estimates have moved 8.8% upward over the past 60 days. Further, its share price has risen 23.6% in the past year. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Associated Banc-Corp (ASB - Free Report) has witnessed upward earnings estimate revision of 1% over the past 60 days for the current year. The Zacks Rank #2 stock has gained 14.9% in the past year.
Also carrying a Zacks Rank #2, Commerce Bancshares, Inc.’s (CBSH - Free Report) earnings estimates for 2018 have been revised 1.1% upward over the past 60 days. Its share price has increased 22.9% in the past year.
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