It seems to be a wise idea to invest in MidWestOne Financial Group (MOFG - Free Report) stock right now. The Iowa City, IO-based company is well poised for revenue growth, driven by continued improvement in loans and deposits, and inorganic growth efforts. Moreover, it has a solid balance sheet position.
Further, MidWestOne Financial’s2019 and 2020 earnings estimates have moved up 3.4% and 3.5%, respectively, over the past 60 days. The stock currently carries a Zacks Rank #2 (Buy).
Moreover, the stock has been performing well. So far this year, shares of MidWestOne Financial have rallied 25.5%, outperforming rise of 9.9% for the industry it belongs to.
What Makes MidWestOne Financial a Solid Pick
Revenue strength: MidWestOne Financial has been witnessing consistent improvement in revenues, driven by growth in loans and deposit balances. Over the last five years (ended 2018), total revenues recorded a compound annual growth rate (CAGR) of 17.4%.
Moreover, backed by strong balance sheet and liquidity position, the company is expected to be able to undertake inorganic expansion moves. Earlier this year, it acquired ATBancorp for $151 million, which is likely to boost its market share.
Notably, the company’s revenues are projected to grow 33% in 2019 and 12.4% in 2020.
Earnings growth: Though MidWestOne Financial’s earnings declined 1.6% over the past three to five years, the same is expected to improve going forward. The company’s projected earnings growth rate is 20.5% and 4.7% for 2019 and 2020, respectively.
Capital deployment plan: MidWestOne Financial has an impressive capital deployment plan. Since 2010, the bank has been increasing its dividend annually. In January, the company announced a 4% hike in quarterly dividend to 20.25 cents per share.
Also, MidWestOne Financial has a share buyback plan in place. As of Jun 30, 2019, the company had $1.1 million authorization left. Give the strong balance sheet position and earnings strength, its capital deployment activities seem sustainable.
Stock seems undervalued: MidWestOne Financial looks undervalued with respect to its price/book and price/earnings (F1) ratios. The company has a P/B ratio of 1.02, which is below the industry average of 1.22. Also, its P/E (F1) ratioof9.99 is lower than the industry average of 11.58.
Also, the stock has a Value Score of B. Our research shows that stocks with a Style 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
Hilltop Holdings Inc. (HTH - Free Report) earnings estimates for the current year have been revised 11.6% upward over the past 60 days. Its shares have surged 38.6% year to date. The stock presently has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
First Business Financial Services, Inc. (FBIZ - Free Report) currently carries a Zacks Rank #2. The company’s 2019 earnings estimates have moved 11.9% upward over the past 60 days. Its shares have rallied 26.4% so far this year.
The Zacks Consensus Estimate for earnings for Mackinac Financial Corporation (MFNC - Free Report) has increased 1.5% over the past 60 days. Its shares have gained 14.9% so far this year. It currently carries a Zacks Rank of 2.
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