Eagle Bancorp, Inc.
(
EGBN
) has delivered positive earnings surprises in the last four
quarters; most recently beating by nearly 13% in the third quarter.
This Zacks #1 Rank (Strong Buy), commercial bank hit a new 52-week
high on October 31 shortly after its quarterly announcement. With a
solid year-to-date return of 37.2% and an expected long-term
earnings growth rate of 10%, this stock looks like a solid momentum
pick.
Impressive Third Quarter Results
On October 22, Eagle Bancorp reported third quarter earnings of 44
cents per share, topping the Zacks Consensus Estimate of 39 cents
by 12.8% and the year-ago earnings of 31 cents by 41.9%. The result
was helped by increased net interest income and elevated
non-interest income, partially offset by enhanced non-interest
expenses.
Net Interest income climbed 31.1% year over year to $33.3 million,
driven by strong balance sheet growth and net interest margin
expansion. Net interest margin expanded 29 basis points on a
year-over-year basis to 4.44%. Additionally, the company's
non-interest income surged 40.0% to $4.9 million. However,
non-interest expenses rose 21.7% to $19.1 million.
Eagle Bancorp's capital position improved in the quarter. Total
assets came in at $3.0 billion, up 15.4% year over year. Total
deposits also surged 23.8% to $2.6 billion. Moreover, total loans
increased 15.0% from the year-ago quarter to $2.3 billion.
Common Stock Offering
On October 31, Eagle Bancorp closed the sale of 552,012 shares of
its common stock at a price of $18.25 per share in an underwritten
offering. The company received net proceeds of about $9.7 million
after underwriting discounts and expenses.
Previously, Eagle Bancorp completed the sale of 2,052,074 shares of
its common stock in open market trading under an "at the market"
equity offering program. The average price was $17.06 per share,
for net proceeds of about $33.8 million after commissions.
Earnings Momentum on an Upswing
The past 30 days have seen an upsurge in all 5 estimates for 2012,
boosting the Zacks Consensus Estimate by 6.7% to $1.60. For 2013 as
well, all estimates moved north over the same time frame, helping
the Zacks Consensus Estimate advance 8.2% to $1.71.
The Zacks Consensus Estimate for 2012 reflects year-over-year
growth of about 40.2%, while the expected growth rate for 2013 is
6.8%.
Reasonable Valuation
Eagle Bancorp currently trades at 13.0x 12-month forward earnings,
an 8% discount to the peer group average of 14.2x. Its price to
book ratio of 1.6 is at a 33% premium to the peer group average of
1.2.
The company has a trailing 12-month ROE of 13.8%, compared with the
peer group average of 10.7%. This implies that the company
reinvests its earnings more efficiently than its peer group.
Chart Shows Strength
Eagle Bancorp has witnessed strong price momentum since the third
quarter earnings release. Moreover, the company has been
continuously outperforming its 200-day moving average along with
S&P 500 for the past year. The year-to-date return for the
stock is 37.2%, compared with the S&P 500's return of 12.4%.
Headquartered in Bethesda, Maryland, Eagle Bancorp, the holding
company for EagleBank, provides various banking products and
services. The company was founded in 1997 and operates through 16
branch offices in Montgomery County, Maryland, Washington, D.C. and
Northern Virginia. With a market capital of about $431.6 million,
Eagle Bancorp competes with Horizon Bancorp. (
HBNC
), among others.
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