Civista Bancshares, Inc. (CIVB - Free Report) is a profitable investment option driven by steady revenue and earnings growth as well as a strong liquidity position. Further, improving economy, higher interest rates, easing banking regulations and rise in demand for loans are expected to support the bank’s profitability.
Analysts also seem to be optimistic about its growth prospects as evident from the upward estimate revisions. Over the past 60 days, the Zacks Consensus Estimate for 2018 and 2019 has been revised 2.4% and 2.1% upward, respectively.
Further, this Zacks Rank #2 (Buy) stock has surged 58.1% over the past two years, outperforming the industry’s growth of 42.5%.
Why Civista Bancshares Stock is a Solid Pick Now
Earnings growth: Civista Bancshares witnessed 21.1% rise in earnings in the last three to five years, significantly above the industry average of 8.8%. This earnings momentum will likely continue in the near term, as reflected by the company’s projected earnings growth rate of 29.3% for 2018 and 14.2% for 2019.
Also, Civista Bancshares has a decent earnings surprise history. The bank delivered an average positive earnings surprise of 13.3% 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: Civista Bancshares’ net revenues have seen a compounded annual growth rate of 7.1% 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 rate of 21.9% and 19.5% for 2018 and 2019, respectivelyensures continuation of the upward revenue trend.
Inorganic growth strategy: Given the strong balance sheet, Civista Bancshares has been growing through acquisitions. Earlier this month, the bank acquired Lawrenceburg, IN-based United Community Bancorp for roughly $119 million. This stock cum cash deal will be accretive to 2018 earnings and 9.3% accretive to 2019 earnings. Earlier in 2015, the company had acquired TCNB Financial Corporation.
Superior ROE: Civista Bancshares’ return on equity ratio is 12.18% compared with industry average of 10.18%. This indicates that the company reinvests more efficiently compared to the industry.
Stock seems undervalued: Civista Bancshares 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.
Also, 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. Hence, the stock looks promising at present.
Other Stocks Worth Considering
A few other stocks from the same space worth a look are German American Bancorp, Inc. (GABC - Free Report) , Enterprise Financial Services Corp. (EFSC - Free Report) and Macatawa Bank Corporation (MCBC - Free Report) . All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
German American Bancorp’s Zacks Consensus Estimate for earnings for 2018 has been revised marginally upward in the past 60 days. Also, its share price has increased 1.3% in the past 12months.
Enterprise Financial’s current-year earnings estimates have been revised 3.3% upward in the past 60 days. Further, the company’s shares have gained 31.7% in a year’s time.
Macatawa Bank’s earnings estimates for 2018 have been revised 4% upward, over the past 60 days. In the past year, its shares have rallied 22.3%.
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