Provident Financial Upped to Strong Buy


On Aug 3, Zacks Investment Research upgraded Provident Financial Services, Inc. (PFS) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Provident Financial has been witnessing rising earnings estimates on the back of strong second-quarter 2013 results. Moreover, this well-known banking and financial services provider delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 14.6%. The long-term expected earnings growth rate for this stock is 5%.

The company reported its second-quarter results on Jul 26 with earnings per share of 34 cents, beating the Zacks Consensus Estimate as well as prior-year quarter’s earnings of 28 cents by 21.4%. Robust results for the reported quarter were primarily aided by elevated non-interest income and substantial reduction in provision for loan losses.

Non-interest income increased 35.5% to $12.6 million, primarily aided by growth in fee income and net gains on securities transactions. Credit quality continues to exhibit an improvement for Provident Financial. Provision for loan losses was $1.0 million compared with $3.5 million in the prior-year quarter. Nonperforming loans were $88.8 million, down 10.4% year over year.

However, on the downside, net interest income declined 2.2% year over year to $53.4 million. Net interest margin was 3.29%, down 4 basis points as compared with the year-ago quarter. Non-interest expense surged slightly from the year-ago period to $37.8 million.

Following second-quarter 2013 results, the Zacks Consensus Estimate for 2013 increased 6.3% to $1.19 per share on the back of upward revisions in all 4 estimates over the last 30 days. For 2014, the Zacks Consensus Estimate advanced 0.8% to $1.19 per share with 3 of the 4 estimates moving north over the same time period.

Other Stocks to Consider

Besides Provident Financial, other stocks with a Zacks Rank #1 include Provident Financial Holdings, Inc. (PROV), Pulaski Financial Corp. (PULB) and Banner Corp. (BANR).

Read the Full Research Report on PFS

Read the Full Research Report on PULB

Read the Full Research Report on PROV

Read the Full Research Report on BANR

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