EFSC is probably the most undervalued stock in the whole banking industry now! (Still under $14.00/share)
- Net earnings 0.52/share for Q2 - Net earnings increased quarter-by-quarter - Extremely high quality of earnings - Asset quality is improving significantly and continuously - Loan portfolio is expanding dramatically despite the sluggish economy - Core earnings increased significantly - Capital strenthened from capital raise at $12.75/share a couple weeks ago - Ample liquidity - Much benefited from a couple of FDIC-assisted acquisitions during the past two years - Should be traded above $20 by the end of 2011
This is totally a must-have stock and the share price is set to skyrocket. I am not paid to advertise, but I am fully loaded with this stock and happy to share with you guys just like my last post about FISI.
EFSC is trading at .97X book value according to yahoo key stats. Many banks are trading much more cheaply such as SCMF at about .57X book or FBOD (which I own) at about .5X book value. There are literally hundreds of bank stocks trading at a significant discount to book. EFSC isn't one of them.
PKBK and FBOD are both examples of microcap banks (little or no analyst coverage) that are trading at .5X book value. These are consistently profitable and well capitalized banks and are far better values than EFSC by other measures such as PE ratio, growth, etc.
EFSC is just not a bargain. Sorry, but if you think that book value is not important in evaluating bank stocks, then you just don't know very much about evaluating bank stocks.
Book values or even tangible book are extremely poor valuation indicators. I do not even look at them at all. There are too many low quality banks that are trading way below their books or tangible books. Many of them even lost their entire book value in a couple of months.
For exmaple, a bank with book value $10 per share, but has a NPA of 8%. This $10 dollar could be gone in a second once the bank charge-off its bad loans.
For example, a bank with book value $10 per share, but cannot make its capital adequate to be well capitalized, this $10 dollar means nothing to FDIC, the bank could be closed in a second.
For example, a bank with book value $10 per share, but doesn't have adequate liquidity or having a bank run. This bank can be dead in a couple of days.
For example, a bank with book value $10 per share, but the management spends too much and the efficiency is so low. This bank may never make money for its shareholders despite of the book value.
FFIN has a book value of $10 per share, and it's now trading at over $30, can you tell me why? Because of its good Capital adequacy, outstanding management, ample liquidy, Great asset quality, and growth potential, and decent earnings, and ......
Book value or tangible book are useless unless you are liquidating the bank. But if you really want to liquidate the entire bank, you need to make a huge discount. This is like your garage sale, can you really sell your stuff at book value?