Underlying strength and earnings growth prospects make DNB Financial Corporation DNBF a solid bet now. The company’s organic growth strategies have positioned it well for growth. Also, improving operating backdrop, a rising rate environment and expectations of lesser regulations and lower tax rates are likely to further support profitability.
Analysts seem to be optimistic about the company’s prospects as the stock has been witnessing upward estimate revisions. Over the past 60 days, the Zacks Consensus Estimate for 2017 earnings has been revised 2.3% upward to $2.20. As a result, it currently carries a Zacks Rank #2 (Buy).
Also, the stock has rallied 20.8% so far this year, outperforming the industry’s gain of 4.1%.
Factors That Make the Stock an Attractive Pick
Revenue Strength: DNB Financial’s revenues witnessed a CAGR of 4.7% over the last five years (2012-2016). This is supported by the company’s loan and deposit growth as well as improving fee income. Further, the acquisition of East River Bank of Philadelphia last year has aided the company’s financials. Hence, the top line is expected to grow 38.5% in 2017.
Earnings Growth: DNB Financial recorded earnings growth of 4.8% over the last three to five years. The momentum is expected to continue as the earnings growth rate for the current year is anticipated to be 29.4% compared with the industry average of 9.3%.
Improving Asset Quality: DNB Financial has been witnessing a continued improvement in asset quality. Over the last three years, provisions for credit losses have decreased at a CAGR of 19.6%. Also, net charge-off rates have been declining. This trend is expected to continue in the near term.
Stock Seems Undervalued: DNB Financial stock looks undervalued with respect to its price-to-earnings (P/E) and price-to-book ratios. The company’s trailing 12-month P/E and P/B ratios of 15.25 and 1.40, respectively, are below the industry averages of 18.82 and 1.52.
Other Stocks Worth a Look
Some other stocks in the same space worth considering are First Bancorp FBNC, Hancock Holding Company HBHC and Southern First Bancshares, Inc. SFST. All the stocks carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
First Bancorp’s earnings estimates were revised 9.7% upward for 2017 over the last 60 days. Also, its share price has risen 34.6% year to date.
Hancock Holding’s earnings estimates for 2017 have been revised marginally upward over the last 60 days. Further, so far this year, the company’s shares have gained 17.7%.
Southern First Bancshares witnessed a 2% rise in earnings estimates for the current year over the last 60 days. Moreover, year to date, its shares have gained 16.5%.
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Hancock Holding Company (HBHC) : Free Stock Analysis Report
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