Recently, Civista Bancshares Inc. (CIVB - Free Report) announced a share repurchase plan, with authorization to buy back up to 672,000 shares. The plan will expire on Dec 17, 2020.
Dennis G. Shaffer, Civista Bancshares’s president and CEO said, "We remain committed to our strategy of growing our franchise. This repurchase program will allow us to be opportunistic given current market dynamics and further deliver value to our shareholders."
Prior to this, Civista Bancshares had announced the repurchase of 0.5 million shares last December, with its expiration on Dec 18, 2019. Apart from this, the bank consistently pays quarterly cash dividends. In April, the company had announced a hike of 22.2% to 11 cents per share, which marked its sixth dividend increase since 2011.
Shares of the company have rallied 33.2% in the year-to-date period, outperforming industry’s growth of 21.2%.
So, is the stock worth a look following the announcement of latest repurchase? For this, we need to dig a bit deeper, and look at this Zacks Rank #3 (Hold) stock’s fundamentals and prospects.
Revenue growth: Organic growth is a key strength for Civista Bancshares. The top line witnessed a five-year CAGR of 11.3% (2014-2018). Moreover, in 2018, the company had acquired Lawrenceburg, IN-based United Community Bancorp with an aim to expand its community banking franchise geographically. Also, steady increase in demand for loans and deposits will continue supporting revenue growth. Further, its projected sales growth rate of 27.7% and 3.6% for 2019 and 2020, respectively, indicates continuation of the momentum.
Earnings strength: Over the past three to five years, Civista Bancshares’ earnings witnessed 17% growth. This uptrend is anticipated to continue as the company’s earnings are projected to be up 8.1% and 5.5% in 2019 and 2020, respectively.
Also, Civista Bancshares has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and matched in one, with the average beat of 4.7%.
Stock seems undervalued: Based on its price-to-book (P/B) and price-to-earnings (P/E) (F1) ratio, Civista Bancshares seems to be undervalued. The company’s P/B ratio of 1.13 is compared with the industry average of 1.30. Additionally, the P/E ratio of the company is 11.53, lower than the industry average of 12.52.
Weak leverage: Civista Bancshares’s debt/equity ratio of 0.83 compares unfavorably with the industry’s average debt/equity ratio of 0.42. This reflects high burden of debt due to which the company’s liquidity might be hampered.
Rising expenses: Mounting non-interest expenses remain a key concern. Over the last five years (ended 2018), expenses witnessed a CAGR of 12.6%. Increase in compensation, net occupancy, equipment and contracted data processing expenses along with higher professional services costs led to the upswing. Also, the company’s 2018 acquisition pushed expenses to a higher end. Persistently increasing costs are likely to curb bottom-line growth to some extent in the near term.
Though Civista Bancshares seems to have promising prospects, one must keep an eye on concerns related to high level of debt and elevated operating expenses.
Eagle Bancorp Montana, Inc. (EBMT - Free Report) has witnessed 8.3% upward earnings estimate revisions for 2019 in the past 60 days. Moreover, this Zacks #1 (Strong Buy) Ranked stock has rallied 33.4% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.
Heartland BancCorp.’s (HLAN - Free Report) ongoing-year earnings estimates have remained unchanged in 60 days’ time. Additionally, the stock has rallied 18.5% so far this year. It sports a Zacks Rank #1 at present.
Old Second Bancorp, Inc.’s (OSBC - Free Report) current-year earnings estimates have been revised 7.5% upward over the past 60 days. Further, the company’s shares have gained 1.3% in the year-to-date period. At present, it carries a Zacks Rank of 2 (Buy).
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