Earnings estimates for
Bank of the Ozarks Inc.
) have been advancing since this regional bank posted strong second
quarter results, which included year-over-year earnings growth of
37.5%. Moreover, the company has a history of beating quarterly
earnings estimates, and has amassed an average earnings surprise of
12.7% over the past four quarters.
Rising earnings estimates helped the stock hit its 52-week high on
July 19, 2012. It achieved a Zacks #1 Rank (Strong Buy) on the same
day. The company currently enjoys a decent dividend yield of 1.6%.
Second Quarter EPS Moves Higher
On July 12, Bank of the Ozarks reported second quarter 2012 net
earnings per share of 55 cents, surpassing the Zacks Consensus
Estimate of 52 cents by 5.8% and the year-ago earnings of 40 cents
by 12.7%. The upsurge was mainly due to reduced non-interest
expenses, reflecting better expense management and improved net
Net interest income declined 0.4% to $42.3 million. Non-interest
income decreased 79% to $15.7 million. However, net interest margin
expanded 4 basis points to 5.84%. Additionally, the company's
non-interest expenses decreased 22.5% to $27.3 million over the
Credit quality improved in the quarter. Net charge-offs plummeted
to $2.8 million from $3.9 million in the prior-year quarter.
Moreover, provision for loan and lease losses declined to $3.1
million from $3.8 million in the prior-year quarter.
Rising Earnings Estimate Revisions
Five of nine estimates have moved higher over the last 7 days for
2012 and 2013 each. The Zacks Consensus Estimate for this year is
up 2.9% to $2.16, while the Zacks Consensus Estimate for next year
gained 3.7% to reach $2.23.
Additionally, the Zacks Consensus Estimate for 2012 reflects a
year-over-year improvement of about 14.1%, while 2013 indicates a
3.6% year-over-year growth.
Steady Dividend Payment
Bank of the Ozarks is one of the few banks that increased its
dividend throughout the financial crisis. The latest hike of 8.3%
was announced in July 2012. Currently the company pays a quarterly
dividend of 13 cents per share, affirming a dividend yield of 1.6%.
Since 2002, the company has hiked its dividend at a compound annual
rate of 21%.
Shares for Bank of the Ozarks currently trade at 15.4x 12-month
forward earnings, a 2.7% premium to the peer group average of
15.0x. Its price to book ratio of 2.5 is also at a significant
premium to the industry median of 1.2. The company has a trailing
12-month ROE of 17.0% compared with the peer group average of 8.3%.
Chart Shows Strength
The stock has been consistently trading above its 200 days moving
average since October 2011.
Bank of the Ozarks is one of the strongest banks with rising
estimates, strong growth projections, a decent dividend yield and
reasonable valuation. Moreover, with consecutive dividend increases
and synergies expected from completed acquisitions in 2011, it
offers attractive upside potential.
Headquartered in Little Rock, Arkansas, Bank of the Ozarks provides
various banking products and services. The company was founded in
1981 and conducts business through 113 branches as of September 30,
2011 in Arkansas, Georgia, Texas, Florida, North Carolina, South
Carolina and Alabama. With a market capital of about $1.14 billion,
Bank of the Ozarks competes with Cardinal Financial Corp. (
) and Farmers Capital Bank Corporation (
BANK OZARKS (OZRK): Free Stock Analysis Report
To read this article on Zacks.com click here.