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Enterprise Financial Upped to Strong Buy

Zacks Equity Research

On Jul 27, 2013, Zacks Investment Research upgraded Enterprise Financial Services Corp. (EFSC) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Enterprise Financial has been witnessing rising earnings estimates on the back of strong second-quarter results. Moreover, the long-term earnings growth rate is projected at 8.00%.

On Jul 25, 2013, Enterprise Financial reported second-quarter earnings of 58 cents per share, significantly surpassing the Zacks Consensus Estimate of 38 cents. This also compared favorably with the prior-quarter earnings of 44 cents per share.

The year-over-year improvement was driven by a decline in operating expenses, partially offset by a fall in net interest income and noninterest income. Moreover, asset quality improved while capital ratios were a mixed bag.

Enterprise Financial’s total revenue came in at $36.4 million, down 11.0% year over year. However, total expenses declined 0.2% year over year and stood at $21.4 million.

Moreover, Enterprise Financial’s asset quality showed an improvement in the reported quarter. Non-performing loans to total loans stood at 1.25% as of Jun 30, 2013 compared with 2.08% as of Jun 30, 2012. Net charge-offs as a percentage of annualized average loans were 0.10% as of Jun 30, 2013 compared with 0.28% as of Jun 30, 2012.

Capital ratios were a mixed bag. As of Jun 30, 2013, Tier 1 capital to risk-weighted assets stood at 11.98% compared with 12.51% in the year-ago period. Tier 1 common equity to risk-weighted assets was 8.71% as of Jun 30, 2013 compared with 7.62% as of Jun 30, 2012.

Over the last 30 days, the Zacks Consensus Estimate for 2013 went up by 3.0% to $1.70 per share. For 2014, the Zacks Consensus Estimate advanced 3.6% to $1.44 over the same time frame.

Other Stocks to Consider

Other stocks that are also worth considering include First Interstate Bancsystem Inc. (FIBK), First Merchants Corp. (FRME) and Firstbank Corp. (FBMI). All these stocks sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on EFSC

Read the Full Research Report on FRME

Read the Full Research Report on FIBK

Read the Full Research Report on FBMI

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