Despite the coronavirus outbreak-led chaos, it seems to be a wise idea to add
SB Financial Group, Inc. ( SBFG Quick Quote SBFG - Free Report) to your portfolio at the moment. The company’s strong fundamentals and prospects keep us encouraged. Also, strong balance sheet position keeps it well-poised for growth.
Further, analysts are bullish on the stock. Over the past 60 days, the Zacks Consensus Estimate for earnings moved 17.9% and 4.2% upward for 2020 and 2021, respectively. The company currently sports a Zacks Rank #1 (Strong Buy).
Shares of SB Financial have lost 14.5% in the past six months compared with the
industry's 30.8% decline.
Factors That Make SB Financial a Solid Pick Earnings Growth: Over the past three to five years, SB Financialhas recorded earnings growth of 7.3%. The momentum is likely to continue in the near term, indicated by the projected earnings growth rate of 4.5% for 2020 (against the projection of a 25.3% decline for the industry). Revenue Strength: SB Financial’s total revenues have witnessed a CAGR of 7.9% over the last five years (2015-2019). The company’s projected sales growth of 8.3% for 2020 (against the projection of no growth for the industry) highlights its revenue strength. Solid Balance-Sheet Position: As of Mar 31, 2020, SB Financialhad total debt of $52.9 million, lower than the cash & cash equivalent balance of $56.4 million. The current total debt to total capital of 10.5% is below the industry average. Also, the company's times-interest-earned ratio of 15.2 at the end of first-quarter 2020 compares favorably with the industry average, and has improved on a sequential basis. These imply that SB Financialcarries a relatively lesser credit risk and is likely to meet interest and/or debt obligations even if the economic situation worsens. Superior ROE: The company’s trailing 12-month return on equity (ROE) highlights its growth potential. Its ROE of 14.60% compares favorably with the industry’s 7.79%, underlining that it is more efficient in using shareholder funds than its peers. Strong Leverage: SB Financial’s favorable debt/equity ratio compared with the industry average reflects the relatively strong financial health of the company. Thus, we believe that it will perform better than peers in an unstable business environment. Stock Looks Undervalued: SB Financiallooks undervalued, with respect to the price/earnings (P/E) (F1) and price/cash flow (P/CF) ratios. It has a P/E (F1) ratio of 9.78, which is below the industry average of 11.6. Also, P/CF ratio of 5.42 compares favorably with 7.6 for the industry.
Additionally, the stock currently has a
Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Other Key Picks
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