Underlying strength and healthy long-term prospects make Millersburg, PA-based Mid Penn Bancorp, Inc. (MPB - Free Report) a solid bet now. Also, strong liquidity and balance sheet position bode well.
Further, analysts are bullish on the stock. The Zacks Consensus Estimate for earnings for the current year has moved 42% upward over the past 30 days, indicating the company’s sound earnings growth potential. Currently, the stock carries a Zacks Rank #2 (Buy).
Shares of Mid Penn Bancorp have lost 33% so far this year compared with the industry’s 39% fall.
Here are the factors that make it a viable investment option right now:
Earnings Strength: Over the past three to five years, Mid Penn Bancorp has recorded earnings growth of 6.4%. This momentum is likely to continue in the near term as well, as indicated by its projected earnings growth rate of 9.8% for 2020 versus the projection of a 25.2% decline for the industry.
Revenue Growth: Mid Penn Bancorp’s net revenues have witnessed a CAGR of 23.1% over the last five years (2015-2019). This top-line improvement was backed by strong performance of the mortgage banking business and acquisitions completed during this period. The uptrend is expected to continue in the near term, as suggested by its projected sales growth rate of 22.8% for 2020.
Strong Balance Sheet Position: As of Mar 31, 2020, Mid Penn Bancorp had a total debt of $77.5 million, and cash and cash equivalents worth $140.8 million. The debt-to-capital ratio, which currently stands at 24.4, has been declining over last few quarters. Also, the company’s times interest earned of 7.4X at the end of first-quarter 2020 has improved sequentially. Thus, given the record of consistent earnings growth and sufficient liquidity, it has lower credit risk and lesser likelihood of default of interest and debt repayments if the economic situation worsens.
Steady Capital Deployment: Mid Penn Bancorp’s ability to generate positive cash flows and enhance shareholder value through regular dividend payments, as well as share repurchases is commendable. In March 2020, the bank authorized a share repurchase plan worth $15 million, which is set to expire on Mar 19, 2021. Also, the company hiked quarterly dividend by 20% in May 2019. Given a strong balance sheet position and lower debt-equity ratio than the industry, its capital deployment actions look sustainable.
Favorable Value Score: Mid Penn Bancorp has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Moreover, the bank’s price/book and price/earnings (F1) ratios are lower than the respective industry average.
Other Stocks to Consider
Tradeweb Markets Inc. (TW - Free Report) earnings estimates for the current year have moved nearly 1% north in 30 days’ time. Further, the company’s shares have rallied 39.2% over the past year. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
GAIN Capital Holdings Inc (GCAP - Free Report) has witnessed 18% upward earnings estimate revision for 2020 in the past 30 days. This Zacks #1 Ranked stock has rallied 49.8% over the past 12 months.
Eagle Bancorp Montana, Inc. (EBMT - Free Report) has witnessed 7.5% upward earnings estimate revision for 2020 in the past 30 days. This Zacks #2 Ranked stock has risen 3% over the past year.
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