First Business Financial Services, Inc. FBIZ looks like an attractive investment option right now on the back of strong fundamentals and promising prospects. The company is well poised for growth, driven by continued improvement in loans and deposits, and solid balance sheet position.
Further, First Business Financial’s 2019 and 2020 earnings estimates have moved up 11.9% and 2.2%, respectively, over the past 60 days. The stock currently carries a Zacks Rank #2 (Buy).
Moreover, the stock has been performing well. So far this year, shares of First Business Financial have rallied 26.4%, outperforming rise of 9.9% for the industry it belongs to.
Here’s Why First Business Financial is an Attractive Pick
Revenue strength: First Business Financial has been witnessing consistent improvement in revenues, driven by growth in loans and deposit balances. Over the last five years (ended 2018), total revenues recorded a compound annual growth rate (CAGR) of 12.5%. This momentum is expected to continue, with the top line expected to grow at the rate of 6.4% in 2019 and 6.1% in 2020.
Earnings growth: Though First Business Financial’s earnings declined 0.5% over the past three to five years, the same is expected to improve going forward. The company’s projected earnings growth rate is 36.6% for 2019.
Also, the company has an impressive earnings surprise history, delivering average earnings beat of 31.6% over the trailing four quarters.
Capital deployment plan: First Business Financial has an impressive capital deployment plan. Since 2013, the bank has been increasing dividend annually. In January, the company announced a 7.1% hike in quarterly dividend to 15 cents per share.
Additionally, First Business Financial has a share buyback plan in place. In September, the company announced a new share buyback plan with authorization to purchase up to $5 million worth of shares. This plan will expire on Sep 30, 2020. In August 2019, the bank completed its previous $5 million share buyback program, which had begun in December 2018.
Give the strong balance sheet position and earnings strength, First Business Financial’s capital deployment activities seem sustainable.
Stock seems undervalued: First Business Financial looks undervalued with respect to its price/book and price/earnings (F1) ratios. The company has a P/B ratio of 1.11, which is below the industry average of 1.22. Also, its P/E (F1) ratioof9.54 is lower than the industry average of 11.58.
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 (Strong Buy) or 2 offer the best upside potential.
Superior Return on Equity (ROE): First Business Financial’s ROE of 11.93% compared with the industry average of 10.77%, indicates the company’s commendable position over its peers.
Other Stocks Worth A Look
Hilltop Holdings Inc. HTH earnings estimates for the current year have been revised 11.6% upward over the past 60 days. Its shares have surged 38.6% year to date. The stock presently has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
MidWestOne Financial Group MOFG stock currently carries a Zacks Rank #2. The company’s 2019 earnings estimates have moved 3.4% upward over the past 60 days. Its shares have rallied 25.5% so far this year.
The Zacks Consensus Estimate for earnings for Mackinac Financial Corporation MFNC has increased 1.5% over the past 60 days. Its shares have gained 14.9% so far this year. It currently carries a Zacks Rank of 2.
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MidWestOne Financial Group, Inc. (MOFG) : Free Stock Analysis Report
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