Heartland Financial USA Inc.
) strong first-quarter performance, which included a 129% earnings
surprise, helped shares reach a new 52-week high on June 12, 2012.
The stock for this regional bank has gained 29% since the beginning
of the year.
The company became a Zacks #1 Rank (Strong Buy) stock on April 25
based on its strong credit quality, steady capital position and
remarkable earnings performance.
First Quarter EPS Ascends
On April 23, Heartland Financial reported first quarter 2012
earnings of 71 cents per share, compared with the Zacks Consensus
Estimate of 31 cents. The result was also nearly four times last
year's 18 cents. An improved net interest margin and a reduced
provision for credit losses led to the solid year-over-year growth.
However, higher non-interest expenses were on the downside.
Net interest income was $38.2 million, up 7% from the year-ago
quarter on the back of a 6% jump in average earning assets.
Non-interest income climbed 86% to $23.4 million. Non-interest
expense grew 22% to $40.1 million. Provision for credit losses
declined 76% from the year-ago quarter to $2.4 million.
Earnings Estimates on the Move
The Zacks Consensus Estimate for 2012 has jumped 41.3% to $2.02
over the past 60 days, while the guidance for 2013 increased 10.8%
to $1.84. The 2012 estimate implies a year-over-year growth of
Valuation Not So Cheap
Heartland Financial currently trades at a forward P/E of 10.0x, a
13% discount to the peer group average of 11.5x. However, on a
price-to-book basis, shares currently trade at 1.2x, a 20% premium
to the peer group average of 1.0x.
Moreover, Heartland Financial has a trailing 12-month return on
equity (ROE) of 13.4%, well above the 8.8% of its peers. This
implies that the company reinvests its earnings more efficiently
than its peer group.
HTLF Continues to Show Strength
Heartland Financial has been generating strong momentum since June
1, with the expectation of improved second-quarter earnings.
Moreover, the company has almost continuously outperformed its
200-day moving average over the last six months. The year-to-date
return for the stock came in at 31.9% compared with the S&P
500's return of 5.3%.
Headquartered in Dubuque, Iowa, Heartland Financial provides
various banking products and services. The company focuses
primarily on clients in the Midwestern, Southwestern and Western
United States, to whom it delivers high-quality financial products
and services. The company was founded in 1981 and conducts business
through sixty-one full-service banking locations as of May 4, 2012.
With a market capital of about $325.6 million, Heartland Financial
competes with First Merchants Corp. (
) and Firstbank Corporation (
HEARTLAND FINCL (HTLF): Free Stock Analysis
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