Citizens Financial Services Inc. (CZFS - Free Report) appears to be a promising bet now given its solid organic growth and robust fundamentals. Also, its earnings growth prospects are impressive. In addition, relatively higher interest rates and inorganic growth efforts are anticipated to support bottom-line growth.
Further, it has been successful in gaining analysts’ confidence. Its current-year earnings estimates have been revised 3.4% upward over the past 60 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Shares of Citizens Financial have gained 6.2% so far this year compared with the industry’s growth of 7.4%.
What Makes the Stock a Good Bet
Revenue Strength: The company has been witnessing consistent improvement in revenues. Over the past three years (ended 2018), total revenues recorded a compound annual growth rate (CAGR) of 9.7%. The upward trend is expected to continue in 2019 at a rate of 4.8%.
Solid Inorganic Growth Strategies: Citizens Financial’s capital strength has been helping it to grow inorganically. As part of this strategy, the company recently announced the acquisition of MidCoast Community Bancorp. The deal bolstered the company’s presence in Northern Delware.
Impressive Balance Sheet Growth: Citizens Financial’s loans and deposits have witnessed a CAGR of 16.3% and 8.6%, respectively, over a five-year period (ended 2018). Also, both loan and deposit balances are likely to get support from an improving economy.
Earnings per Share Growth: Citizens Financial’s earnings for 2019 are projected to increase 6.11% compared with the industry’s average of 4.88%. This earnings momentum is likely to continue in the near term as reflected by the company’s projected earnings growth rate of 7.41% for 2020.
Superior Return on Equity (ROE): The company’s ROE of 13% compared with the industry average of 10.15% underlines its commendable position over peers.
Valuation Looks Reasonable: Citizens Financial looks undervalued with respect to its price-to-cash flow (P/CF) and price-to-earnings (P/E) ratios. The company has a P/CF ratio of 10.64 compared with the industry average of 11.26. Also, the bank’s P/E ratio of 10.81 is below the industry average of 11.69. Additionally, the company has a Value Score of B.
Other Stocks to Consider
The Zacks Consensus Estimate for Ally Financial’s (ALLY - Free Report) current-year earnings has been revised slightly upward in the past 60 days. Also, its share price has surged 39.1% so far this year. It carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Encore Capital Group Inc (ECPG - Free Report) currently has a Zacks Rank of 2. Its earnings estimates for 2019 have been revised 3.9% upward over the past 60 days. Further, year to date, the company’s shares have gained 36.7%.
The Zacks Consensus Estimate for Credit Acceptance Corporation (CACC - Free Report) current-year earnings has been revised 3% upward in the past 60 days. Also, its share price has risen 15.7% so far this year.
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