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StellarOne Corp. Upped to Strong Buy

Zacks Equity Research

On Mar 27, Zacks Investment Research upgraded StellarOne Corporation (STEL) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

StellarOne has been witnessing rising earnings estimates on the back of strong fourth-quarter 2012 results. Moreover, this well-known commercial banking services provider delivered positive earnings surprises in the last 4 quarters, with an average beat of 15.8%. The long-term expected earnings growth rate for this stock is 5.0%.

StellarOne reported fourth-quarter results on Jan 24. Earnings per share came in at 27 cents, surpassing the Zacks Consensus Estimate of 24 cents by 12.5% and year-ago earnings of 17 cents by 58.8%.

Earnings were primarily aided by solid year-over-year growth of 14.0% in non-interest income coupled with a 2.8% decrease in non-interest expenses. Moreover, pre-tax, pre-provision earnings were $10.6 million, up 19.4% year over year.

StellarOne marked growth in total assets and loans and the company’s balance sheet exhibited a strong capital position. Credit quality metrics also continued to improve, recording foreclosed asset levels at the lowest in the last 8 quarters. Moreover, non-performing assets declined 12.8% compared with the prior-year quarter, while net charge-offs for the fourth quarter of 2012 descended 67.6% year over year.

The Zacks Consensus Estimate for 2013 increased 4.2% to $1.00 per share over the last 60 days. For 2014, the Zacks Consensus Estimate jumped 6.0% to $1.06 per share over the same time frame.

Other Stocks to Consider

Besides StellarOne, other banks that are worth considering include Popular Inc. (BPOP), Monarch Financial Holdings, Inc. (MNRK) and Union First Market Bankshares Corporation (UBSH). All the 3 banks retain a Zacks Rank #1.

Read the Full Research Report on BPOP

Read the Full Research Report on MNRK

Read the Full Research Report on UBSH

Read the Full Research Report on STEL

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