Glacier Bancorp, Inc.’s (GBCI - Free Report) board of directors announced a special dividend of 30 cents. The dividend will be paid on Jan 17, 2019, to shareholders of record as of Jan 8.
Prior to this, the company has already announced 14 special dividends. Moreover, it has announced dividend hikes for almost 43 times.
Given a solid capital and liquidity position, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.
However, let’s see whether it is worth considering Glacier Bancorp stock based on this dividend income.
Let’s dig deeper into the bank’s financial performance and fundamentals to understand its risks and rewards.
Glacier Bancorp’s revenues witnessed a CAGR of 8.1% over the last five years (2013-2017). Further, its projected sales growth rates of 22.5% and 8.1% for 2018, and 2019, respectively, ensure the continuation of uptrend in revenues.
Additionally, over the last three-five years, the company witnessed earnings per share (EPS) growth of 6.9%. Moreover, it is expected to deliver strong earnings performance as indicated by its projected EPS growth of 25.1% and 11.8% for 2018 and 2019, respectively.
Further, the company’s return on equity (ROE), which currently stands at 11.96%, is higher than the industry average of 11.44%. This shows that the company is more efficient than its peers in terms of utilising shareholders’ funds.
Based on the above-mentioned factors, the stock looks worth investing in, but, one should take into consideration the following downsides before taking the final decision.
Glacier Bancorp’s debt/equity ratio of 0.20 compares unfavorably with the industry average of 0.18. This indicates that the company has a higher debt burden relative to the industry and that it might not be financially viable in adverse economic conditions.
Furthermore, the stock looks overvalued based on its price-to-earnings (P/E) and PEG ratios. The company currently has a P/E (F1) ratio of 17.6 and a PEG ratio of 1.8, which are above the industry average of 11.1 and 1.4, respectively.
Moreover, Glacier Bancorp’s price performance is not very impressive. Its shares have lost 2.3% in the past 12 months compared with 20.6% decline registered by the industry it belongs to.
Just because Glacier Bancorphas announced a special dividend, we don’t think it will be wise to bet on the stock right away. A stretched valuation and poor financial leverage make us apprehensive about its prospects.
Notably, the company’s Zacks Consensus Estimate for current-year earnings has also remained unchanged over the past 30 days. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks from the finance space are On Deck Capital, Inc. (ONDK - Free Report) , Credit Acceptance Corporation (CACC - Free Report) and Ally Financial Inc. (ALLY - Free Report) .
On Deck Capital currently sports a Zacks Rank #1 (Strong Buy). Over the past 60 days, it has witnessed an upward earnings estimate revision of 22.7% for the current year. Additionally, the stock has gained 31.1% in the past two years.
Credit Acceptance’s earnings estimates for the current year have been revised 3.4% upward over the past 60 days. Its shares have surged 72.8% in the past two years. The stock currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, Ally Financial’s earnings estimates for the current year have been revised 1.3% upward. The company’s shares have increased 16.5% in the past two years. The stock currently carries a Zacks Rank #2 (Buy).
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