Underlying strength and earnings growth prospects make BancFirst Corporation BANF a solid bet now. The factors that might drive the stock higher include impressive organic growth, strategic efforts to expand presence, and capital strength.
Further, a favorable operating backdrop with the higher interest rates, tax reforms and eased regulations should support banks.
A positive trend in estimate revisions reflect optimism over the company’s earnings growth prospects. The Zacks Consensus Estimate for its current-year earnings has being revised 14.5% upward over the past 30 days. As a result, the stock currently sports a Zacks Rank #1 (Strong Buy).
In addition, the stock has gained 1.2% in the past six months compared with the industry’s 2.5% growth.
Here’s What Might Drive the Stock Higher
Earnings Strength: BancFirst’s historical earnings per share (EPS) growth rate of 8.2% compares favorably with the industry average of 5.6%. However, investors must also consider the projected EPS growth. Its earnings are expected to grow at the rate of 2% for 2019 and 3.1% for 2020.
Further, this earnings momentum is likely to continue in the long term (three to five years) as reflected by the company’s projected earnings per share growth rate of 7%.
Balance Sheet Growth: BancFirst’s loans and deposits have witnessed a CAGR of 6.6% and 2.2%, respectively, over a five-year period (ended 2018). Also, both loan and deposit balances are likely to get support from an improving operating environment.
Revenue Growth: Organic growth remains strong at BancFirst. Revenues witnessed a CAGR of 8.6% over the last five years (2014-2018). Further, the top line is expected to increase 9.5% in 2017 against no growth for the industry.
Solid Inorganic Growth Strategies: BancFirst’s capital strength has been helping it to grow inorganically. As part of this strategy, the company acquired First Wagoner Corp and First Chandler Corp. along with their subsidiariesin January 2018. Both the deals complement the company’s community banking strategy by increasing its banking network in Oklahoma.
Steady Capital Deployment Activities:The company remains committed to enhancing shareholders’ value. In August 2018, it raised its quarterly dividend by 42.9% to 30 cents per share.
Favorable Return on Equity (ROE): BancFirst’s ROE supports its growth potential. Its ROE of 14.31% compares favorably with the industry average of 10.59%, implying that it is efficient in using its shareholders’ funds.
Strong Leverage: BancFirst’s debt/equity ratio is 0.03 compared with the industry average of 0.34. The relatively strong financial health of the company will help it perform better than its peers under an unstable business environment.
Other Stocks to Consider
Other stocks worth considering in the finance space include OP Bancorp OPBK, First Internet Bancorp INBK and The Bancorp, Inc. TBBK. All these stocks flaunt a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for OP Bancorp’s current-year earnings has been revised 22.4% upward over the past 30 days. Also, its share price has seen a 14.5% rise in the past three months.
First Internet’s earnings estimates have been revised 12.3% upward for the ongoing year over the past 30 days. Also, in the past three months, its share price has increased 3%.
Earnings estimates for The Bancorp have moved up 9.1% for 2019 over the past 30 days. Also, its share price has seen a 5.7% rise in the past three months.
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