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What Can We Expect for Lakeland Bancorp Inc (NASDAQ:LBAI) Moving Forward?

Sean Barnes

Lakeland Bancorp Inc (NASDAQ:LBAI), a US$918.84m small-cap, operates in the banking industry, which has recently been facing serious existential threats resulting from potential disintermediation and disruption from new technology. Financial services analysts are forecasting for the entire industry, a strong double-digit growth of 23.51% in the upcoming year , and a whopping growth of 33.65% over the next couple of years. However this rate still came in below the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Lakeland Bancorp is lagging or leading in the industry.

See our latest analysis for Lakeland Bancorp

What’s the catalyst for Lakeland Bancorp’s sector growth?

NasdaqGS:LBAI Past Future Earnings August 16th 18
NasdaqGS:LBAI Past Future Earnings August 16th 18

The threat of disintermediation in the payments industry is both real and imminent, taking profits away from traditional incumbent financial institutions. Over the past year, the industry saw growth in the teens, though still underperforming the wider US stock market. Lakeland Bancorp leads the pack with its impressive earnings growth of 18.51% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 15.74% compared to the wider banking sector growth hovering in the twenties next year. As a future industry laggard in growth, Lakeland Bancorp may be a cheaper stock relative to its peers.

Is Lakeland Bancorp and the sector relatively cheap?

NasdaqGS:LBAI PE PEG Gauge August 16th 18
NasdaqGS:LBAI PE PEG Gauge August 16th 18

The banking sector’s PE is currently hovering around 16.17x, in-line with the US stock market PE of 18.05x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 8.84% compared to the market’s 11.40%, potentially indicative of past headwinds. On the stock-level, Lakeland Bancorp is trading at a PE ratio of 15.83x, which is relatively in-line with the average banking stock. In terms of returns, Lakeland Bancorp generated 9.70% in the past year, in-line with its industry average.

Next Steps:

If Lakeland Bancorp has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a banking industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the financial sector. However, before you make a decision on the stock, I suggest you look at Lakeland Bancorp’s fundamentals in order to build a holistic investment thesis.

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Historical Track Record: What has LBAI’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lakeland Bancorp? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.