On Feb 12, Zacks Investment Research upgraded Kearny Financial Corp. (KRNY) to a Zacks Rank #1 (Strong Buy).
Rationale Behind the Upgrade
Kearny Financial has been witnessing rising earnings estimates aided by strong fiscal second-quarter 2014 results as well as its efficient inorganic growth strategy. Moreover, this financial service provider has delivered positive earnings surprises in the past 4 quarters with an average beat of 93.8%. The long-term expected earnings growth rate for this stock is 4.0%.
Kearny Financial reported second-quarter fiscal 2014 results on Jan 30. Earnings per share of 5 cents outpaced the Zacks Consensus Estimate by a penny. The bottom line was also significantly up from the year-ago quarter figure of 2 cents.
Results primarily benefited from a rise in net interest income (:NII) and decline in provision for loan losses. On a year-over-year basis, NII increased 15.5% to $18.5 million while provision for loan losses declined 59.9% to $0.6 million.
Moreover, along with the earnings release, Kearny Financial announced a merger deal with Atlas Bank. Once the merger is complete, Atlas Bank will become part of Kearny Federal Savings Bank, Kearny Financial’s holding company. The deal is expected to close in the second or third quarter of calendar year 2014 and will help expand the company’s existing footprint, thereby boosting profitability in the long run.
The Zacks Consensus Estimate for fiscal 2014 increased 21.4% to 17 cents per share over the last 30 days. For fiscal 2015, the Estimate rose 17.6% to 20 cents over the same time frame.
Other Stocks to Consider
Apart from Kearny Financial, other financial stocks worth considering include Flushing Financial Corp. (FFIC), Meridian Interstate Bancorp, Inc. (EBSB) and Mutualfirst Financial Inc. (MFSF). All of these carry the same Zacks Rank as Kearny Financial.