7 Reasons Why F.N.B. Corp (FNB) Stock is a Must Buy Now
F.N.B. Corporation FNB is well-positioned for organic and inorganic growth, given the solid balance sheet and liquidity position and decent loan demand. Also, its efforts to digitize operations will support growth.
In addition, analysts are bullish on the stock’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for earnings has moved 5.2% and 3.7% north for 2023 and 2024, respectively. FNB currently sports a Zacks Rank #1 (Strong Buy).
Over the past three months, shares of F.N.B. Corp have dropped 11.2% compared with the industry’s 17.3% decline.
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Here are a few factors that make the FNB stock worth betting on now:
Earnings Growth: F.N.B. Corp witnessed earnings growth of 4.2% in the past three to five years. The company’s earnings are projected to increase 16.4% this year and 1% in 2024.
Moreover, F.N.B. Corp has an impressive earnings surprise history. The company's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 6.83%.
Revenue Strength: F.N.B. Corp is focused on its revenue growth strategy. Though net revenues declined in 2021 due to lower rates and a dismal lending scenario, it witnessed a CAGR of 5.6% over the last six years (2017-2022). Further, net loans saw a CAGR of 7.5% over the same period. Thus, a robust loan balance and higher rates are expected to keep aiding top-line growth going forward.
The company is also undertaking strategic actions to improve non-interest income by enhancing its product suite and expanding services. In 2022, fee income comprised 22.4% of total net revenues. Decent economic growth, strategic expansion moves like de novo expansion and rising loan demand will continue to support the top line in the quarters ahead.
The company’s sales are expected to grow 16% in 2023 and 1.3% in 2024.
Synergies From Opportunistic Buyouts: Acquisitions remain a major portion of F.N.B. Corp’s business expansion plan and top line and footprint diversification efforts. Since 2005, the company has successfully integrated several buyouts.
Also, FNB acquired several branches from other banks. In 2022, the company acquired UB Bancorp to expand its presence in North Carolina and Howard Bancorp. These, along with prior deals, will continue to be accretive to the company’s earnings.
Improvement in Operating Efficiency: F.N.B. Corp has been integrating mobile, online and in-branch modes for a seamless and convenient banking experience. The bank witnessed a substantial rise in digital traffic over the past couple of years, with clients relying heavily on online tools to do banking transactions. It has been building on its ongoing investments in sophisticated technology to enhance customer experience, including integrating its e-Store shopping tool into the FNB Direct mobile app.
In the second quarter of 2022, the company started rolling out its digital e-Store kiosks across all its branches. In July, it announced plans to expand the branch network in northern Virginia and the Washington, D.C. metropolitan area by 2024. Also, FNB plans to increase its ATM network. These initiatives are expected to improve operating efficiency over time.
Strong Balance Sheet: As of Dec 31, 2022, the company had total debt worth $2.5 billion and cash and cash equivalents of $1.7 billion. Thus, given its earnings strength and a solid liquidity position, the company is expected to be able to continue meeting debt obligations in the near term, even if the economic situation worsens.
Steady Capital Deployments: F.N.B. Corp has been regularly paying a quarterly dividend of 12 cents per share, which currently yields 4.14%. Apart from this, it has a share repurchase program in place. As of Dec 31, 2022, $175.6 million worth of shares remained available under the authorization. Given the company’s strong balance sheet and liquidity positions, its capital deployments seem sustainable.
Reasonable Valuation: F.N.B. Corp stock looks undervalued right now with respect to its price-to-book (P/B) and price-to-earnings (P/E) (F1) ratios. It has a P/B ratio of 0.73, lower than the industry average of 1.03. Moreover, the company’s P/E (F1) ratio of 7.12 is below the industry average of 8.39.
Also, the stock has a Value Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential.
Other Banks to Consider
A couple of other stocks from the banking space worth a look are Bank7 Corp. BSVN and HomeTrust Bancshares, Inc. HTBI. Both BSVN and HTBI carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Bank7 Corp’s current-year earnings has been revised marginally upward over the past 30 days. BSVN’s shares have declined 2.5% over the past three months.
HomeTrust Bancshares recorded a marginal upward earnings estimate revision for 2023 over the past 30 days. Over the past three months, the HTBI stock has risen 6.8%.
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F.N.B. Corporation (FNB) : Free Stock Analysis Report
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