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Despite the coronavirus outbreak-led chaos, it seems to be a wise idea to add ConnectOne Bancorp, Inc. CNOB to your portfolio at the moment. The company’s strong fundamentals and prospects keep us encouraged. Also, strong balance sheet position keeps it well-poised for growth.
The Zacks Consensus Estimate for ConnectOne’s earnings has been revised 4.1% upward for 2020 over the past 30 days. The company currently carries a Zacks Rank #2 (Buy).
Its shares have lost 35.9% in the past six months compared with the industry’s decline of 29.1%.
Revenue Strength: ConnectOne’s total revenues witnessed a CAGR of 16.5% over the last five years (2015-2019). The company’s projected sales growth of 29.5% for 2020 (against the projection of no growth for the industry) highlights its revenue strength.
Earnings Strength: ConnectOne has witnessed a 12.4% gain in earnings in the past 3-5 years compared with the industry’s 11.8% growth. While earnings are expected to decline 20.4% in 2020 due to the current economic slowdown and a tough operating backdrop, the same is projected to grow 5.6% in 2021. We believe that the company’s earnings might continue to grow on its solid growth efforts.
Impressive Balance Sheet Growth: ConnectOne’s loans and deposits witnessed a CAGR of 13.3% and 14.3%, respectively, over a five-year period (ended 2019). Also, both loan and deposit balances are likely to improve in the quarters ahead.
Superior Return on Equity: The company’s trailing 12-month return on equity (ROE) highlights its growth potential. Its ROE of 8.93% compares favorably with the industry’s 8.47%, underlining that it is more efficient in using shareholder funds than its peers.
Strong Leverage: ConnectOne’s favorable debt/equity ratio compared with the industry average reflects its relatively strong financial health. Thus, we believe that it will perform better than peers in an unstable business environment.
Reasonable Valuation: The stock looks undervalued right now when compared with its broader industry. It currently has a price-to-book ratio of 0.72, marginally lower than the industry average of 0.81. Also, its price-to-earnings (F1) ratio of 8.74 is below the industry’s 11.67. Moreover, the stock has a Value Score of B. The Value Style Score condenses all valuation metrics into one actionable score, which helps investors steer clear of 'value traps' and identify stocks that are truly trading at a discount.
Other Key Picks
FS Bancorp’s FSBW 2020 earnings estimates have been revised 38.1% upward over the past 30 days. This Zacks Rank #1 (Strong Buy) company’s shares have lost 18.5% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrim BanCorp’s NRIM earnings estimates for the current year have been revised 7.8% upward over the past 60 days. In the past six months, this Zacks #1 Ranked company’s shares have lost 32.5%.
Earnings estimates for Sierra Bancorp BSRR have moved 10.5% north over the past 30 days for the ongoing year. The company’s shares have tanked 26.1% over the past six months. It sports a Zacks Rank of 1 at present.
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Sierra Bancorp (BSRR) : Free Stock Analysis Report
Northrim BanCorp Inc (NRIM) : Free Stock Analysis Report
ConnectOne Bancorp, Inc. (CNOB) : Free Stock Analysis Report
FS Bancorp, Inc. (FSBW) : Free Stock Analysis Report
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