Here's Why You Should Buy Camden National (CAC) Stock Now
Camden National Corp. CAC is well-poised for growth on the back of earnings growth potential and revenue strength. Hence, buying the stock now seems to be a good investment decision.
The Zacks Consensus Estimate for CAC’s 2024 earnings has remained unchanged, whereas 2025 earnings have been revised upward by 10.3% over the past 30 days. This indicates that analysts are optimistic regarding the company’s growth prospects. The company currently sports a Zacks Rank #1 (Strong Buy).
Over the past six months, its shares have lost 4% against the industry’s growth of 3.8%.
Image Source: Zacks Investment Research
Let’s dive deeper into some of the factors that make the CAC stock a lucrative buy right now.
Earnings Growth Potential: CAC witnessed 2.1% growth in earnings per share (EPS) over the last three to five years. Though the Zacks Consensus Estimate for EPS is expected to decrease 14.6% in 2024, the trend is likely to reverse in 2025, with expected EPS growth of 11%.
Revenue Strength: Though Camden National’s revenues declined in 2020 and 2021 due to low rates, the metric witnessed a CAGR of 5.1% over the past four-year period (2019-2023) on the back of higher rates in 2022 and 2023. Also, loans reflected a CAGR of 7.2% in the same time frame.
Further, balance sheet repositioning, deposit-mix change and high rates are expected to support net interest margin (NIM) in the quarters ahead. Management expects NIM to remain flattish for the first half of 2024, with a slight recovery in the second half.
These, along with efforts to bolster fee income, are expected to keep supporting revenues. The Zacks Consensus Estimate for total revenues indicates growth of 7.2% and 6.2% in 2024 and 2025, respectively.
Impressive Capital Distribution: Camden National has been regularly paying quarterly dividends, with the last dividend hike of 5% announced in December 2022. The company has increased dividends four times in the last five years. Currently, the annual dividend yield is 5.36% based on the closing price of $31.35 on Mar 1, 2024. Moreover, it has a five-year annualized dividend growth of 8.77% and a dividend payout ratio of 48%.
CAC has a share repurchase program in place. It repurchased 0.07 million shares at an average price of $30.44 per share during 2023. In January 2024, the company announced a new repurchase plan for 0.75 million shares, replacing the prior program. A robust balance sheet makes the current capital distribution plans sustainable.
Superior Returns: CAC has a return on equity (ROE) of 11.08% compared with the industry’s ROE of 9.59%, indicating an efficient capital allocation to generate superior returns to enhance shareholder wealth.
Stock Seems Undervalued: Camden National’s Price-to-Cash Flow (P/CF) ratio is 6.56 compared with the industry’s 6.89, indicating that the stock is undervalued.
Furthermore, the stock has a Value Score of B. Our research suggests that stocks with a Style Score of A or B, when combined with Zacks Rank #1 or 2 (Buy), offer the highest upside potential.
Other Bank Stocks to Consider
Earnings estimates for Northrim BanCorp, Inc. NRIM for 2024 have increased 7.8% over the past 30 days. Shares of NRIM have gained 14.6% over the past six months. At present, NRIM sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for BayCom Corp. BCML for 2024 have remained unchanged over the past 30 days. Shares of BCML have gained 4% in the past six months. Currently, BCML carries a Zack Rank #2.
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