Here's Why Associated Banc-Corp (ASB) Stock is Worth Buying Now
Despite challenges stemming from coronavirus-induced crisis, it seems to be a wise idea to add Associated Banc-Corp ASB stock to your portfolio. The stock is backed by strength in its fundamentals and inorganic-expansion efforts. Further, the company's steady capital deployment activities make it an attractive choice for investors.
Moreover, the company is witnessing upward earnings estimate revisions lately, reflecting analysts’ optimism regarding its earnings growth potential. In the past 60 days, the Zacks Consensus Estimate for earnings moved 8.1% and 8.2% upward for 2020 and 2021, respectively. The stock currently carries a Zacks Rank #2 (Buy).
Shares of Associated Banc-Corp have gained 36.1% in the past three months compared with the industry's 35.8% rally.
Mentioned below are some factors that make Associated Banc-Corp stock an attractive investment option now.
Earnings Growth: In the past three to five years, Associated Banc-Corp recorded earnings growth of 9.8%. Also, the company's earnings are projected to grow 8% in the long term.
Moreover, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two and matched in one of the trailing three quarters, the surprise being 12%, on average.
Revenue Strength: Associated Banc-Corp is witnessing steady improvement in revenues. In the past four years (ended 2019), total revenues witnessed a compound annual growth rate (CAGR) of 4.4%.The upside is mainly driven by higher net interest income as well as growth in loans and deposit balances.
Strategic Acquisitions: Associated Banc-Corp concluded several strategic deals in the past few years. In February2020, the company acquired First Staunton Bancshares. In June 2019, it acquired 32 branches in Winconsin. Earlier in the first half of 2018, it had acquired Anderson Insurance, Diversified Insurance Solutions and Bank Mutual. These deals are expected to boost the company’s earnings. The company's solid liquidity position makes it well poised to grow further on the back of opportunistic buyouts.
Steady Capital-Deployment Activities: Associated Banc-Corp is committed toward enhancing shareholders’ value. The companyhas been paying out regular quarterly dividends, which was last hiked in October 2019by 5.9% to 18 cents per share. Considering last day’sclosing price of $17.17 per share, the company's dividend yield currently stands at 4.2%.
Also, Associated Banc-Corp has a share-buyback program, which is currently on hold due to the pandemic-induced uncertainties. The program, which was announced in December 2019, authorized share repurchases of up to $150 million. Thus, given the earnings strength, the company will likely be able to sustain current capital deployments.
Reasonable Valuation: Associated Banc-Corp looks undervalued right now compared with its broader industry. It currently has a price-to-earnings ratio of 9.89, lower than the industry average of 12.91. Also, its price-to-book ratio of 0.71 is below the industry’s 1.02.
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.
Stocks to Consider
Farmers National Banc Corp. FMNB witnessed an upward earnings estimate revision of 6.7% for 2020 in the past two months. Its shares have declined 18.1% inthe past year. At present, it sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1Rank stocks here.
First Merchants Corporation FRME witnessed a 5.3% upward earnings estimate revisions for the current year in the past 60 days. Its shares have lost9.5% in the past year. At present, it sports a Zacks Rank of 1.
First Financial Corporation Indiana THFF recorded 11.7% upward earnings estimate revision for the ongoing year in the past 60 days. This Zacks Rank #2 stock has declined 14.5% in the past year.
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