Underlying strength and healthy long-term prospects make Glenville, NY-based TrustCo Bank Corp NY TRST a solid bet now. Also, strong liquidity and balance sheet position bode well.
Further, analysts are bullish on the stock. The Zacks Consensus Estimate for the bottom line for the current year has moved 2% upward over the past 60 days, indicating the company’s sound earnings growth potential. The consensus estimate for earnings has remained stable for 2021. Currently, the stock carries a Zacks Rank #2 (Buy).
Shares of TrustCo Bank Corp have lost 28.3% so far this year compared with the industry’s 35.6% fall.
Here are the factors that make it a solid investment pick right now:
Earnings Strength: Over the past three to five years, TrustCo Bank Corp has recorded earnings growth of 10%. Though earnings are expected to decline 13.3% in 2020, mainly owing to a tough macro economic backdrop, the same is projected to rise 5.8% in 2021.
Revenue Growth: TrustCo Bank Corp’s net revenues have witnessed a CAGR of 2.1% over the last five years (2015-2019). This top-line improvement was backed by strong loan and deposit balances. Though revenues are expected to fall 2.2% in the current year, the same is expected to grow at a rate of 3.6% in 2021.
Strong Balance Sheet Position: As of Mar 31, 2020, TrustCo Bank Corp had a total debt of $148.1 million, and total cash and cash equivalents worth $536.1 million. The debt-to-capital ratio, which currently stands at 9.1, has declined sequentially. Also, the company’s times interest earned of 54.2X at the end of first-quarter 2020 has been improving over the last several quarters. Thus, given the record of consistent earnings growth and sufficient liquidity, it has lower credit risk and lesser likelihood of default of interest and debt repayments if the economic situation worsens.
Superior ROE: TrustCo Bank Corp’s t trailing 12-month return on equity (ROE) highlights its growth potential. The company's ROE of 10.64% compares unfavorably with 8.79% for the industry, underlining that it is more efficient in using shareholder funds than peers.
Strong Leverage: TrustCo Bank Corp’s debt/equity ratio of 0.10 compares favorably with the industry average of 0.40, thereby reflecting the company’s relatively strong financial health. Thus, we believe that it will perform better than peers in an unstable business environment.
Stock Seems Undervalued: TrustCo Bank Corp has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Stocks to Consider
TFS Financial Corporation’s TFSL earnings estimates for the ongoing year have been revised 1% upward in the past 60 days. This Zacks #1 Ranked stock has lost 11.3% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Prospect Capital Corporation PSEC witnessed an upward earnings estimate revision of 12.5% for the current year over the past 30 days. Its shares have lost 16.6% over the past year. At present, it sports a Zacks Rank of 1.
ESSA Bancorp, Inc. ESSA witnessed an upward earnings estimate revision of 5.5% for 2020 over the past 30 days. Its shares have lost 13.4% over the past year. Currently, it carries a Zacks Rank of 2.
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TFS Financial Corporation (TFSL) : Free Stock Analysis Report
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