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First Midwest (FMBI) Rolls Out Share-Buyback Plan Worth $200M

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First Midwest Bancorp, Inc. FMBI continues to reward its shareholders through dividend hikes or additional share repurchases. The company recently announced a new share-buyback plan, with authorization to repurchase common shares worth $200 million, effective until Dec 31, 2021.

Notably, the latest authorization replaces the prior share-repurchase program expected to expire by the end of March 2020. Notably, under the previous program, which was authorized to buy back shares worth $180 million, First Midwest repurchased $44.9 million of shares.

First Midwest has also been paying quarterly dividends, along with regular hikes. Since 2011, the company has raised its dividend eight times. Its dividend was last hiked in January 2020 by 17% to 14 cents per share.

First Midwest has rallied 2.7% in the last six months compared with the industry’s growth of 4.8%. Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With strong liquidity and balance-sheet position, we believe First Midwest will continue to reward its shareholders, in the days to come. Let’s dig deeper into its financials and fundamental strengths and see if the company is worth considering.

Stock is Undervalued: With respect to the price-to-earnings (P/E) and price-to-book (P/B) ratios, First Midwest looks undervalued. The company’s P/E ratio of 10.43 comes in below the industry average of 11.44. Also, the P/B ratio of the company is 0.9 compared with the industry average of 1.23.

Revenue Strength: First Midwest continues to make steady progress toward improving its top line. Sales witnessed a 16.2% compounded annual growth rate (CAGR) over the last five years (2015-2019). Moreover, the company’s projected sales growth (F1/F0) of 5.2% indicates constant upward momentum in revenues.

Earnings Growth: First Midwest has witnessed earnings growth of 14.6% in the last three-five years. Additionally, it delivered an average positive earnings surprise of 4.18% in the preceding four quarters.

Similar Moves

During the current quarter, among other finance stocks, Popular, Inc. BPOP, Stifel Financial Corp. SF and Jefferies Financial Group Inc. JEF have also announced share-repurchase authorizations.

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