Taylor Capital Group - Momentum

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Taylor Capital Group Inc. ( TAYC ) has been very strong in the past six months as shares have gained more than 50% year to date. This regional banking stock became a Zacks #1 Rank (Strong Buy) on May 19. Based on its strong credit quality, stable capital position and impressive earnings results, TAYC looks like it could continue this momentum.

Upbeat First-Quarter Results

On April 19, Taylor Capital reported first quarter 2012 earnings per share of 26 cents, which beat the Zacks Consensus Estimate of 16 cents by 63%. This also compared favorably with last year's loss of 12 cents. An increased top line and a reduced provision for loan losses led to the solid year-over-year improvement. However, the positives were partially offset by higher operating expenses.

Net interest income was $35.8 million, up 11% from the year-ago quarter on the back of a 32% drop in total interest expenses. Non-interest income jumped significantly to $23.9 million as a result of a huge surge in mortgage banking revenue. Non-interest expense grew 28% to $36.6 million. Provision for loan losses went down 28% from the year-ago quarter to $7.4 million.

Earnings Estimates on the Rise

The Zacks Consensus Estimate for 2012 jumped 33.3% to $0.96 over the past 60 days, while the guidance for 2013 advanced 8.6% to $1.14. The 2012 estimate implies year-over-year growth of 741.7%.

Justified Valuation

Taylor Capital currently trades at a forward P/E of 15.5x, a 38% premium to the peer group average of 11.2x. Also, on a price-to-book basis, shares currently trade at 1.4x, a 39% premium to the peer group average of 0.97x.

The company has a trailing 12-month return on equity (ROE) of 11.7%, well above the peer group average of 9.0%. This implies that the company reinvests its earnings more efficiently than its peer group.

Chart Illustrates Strength

Taylor Capital has been continuously trending higher since the completion of its $35.0 million rights offering on December 19, 2011. Moreover, the company has continuously outperformed its 200-day moving average and the S&P 500's performance over the last six months.

Currently, Taylor Capital is trading just 2% below its 52-week high. The year-to-date return for the stock is 53.3% compared with the S&P 500's return of 4.5%.

Headquartered in Rosemont, Illinois, this entity operates as the holding company for Cole Taylor Bank. Taylor Capital offers a wide range of retail banking, asset-based lending and residential mortgage banking services to middle-market companies with annual revenues of $5-$250 million. Incorporated in 1996, the company conducts business through nine full-service banking locations as of December 31, 2011. With a market capital of about $418.7 million, Taylor Capital competes with Heartland Financial USA Inc. ( HTLF ) and Macatawa Bank Corp. ( MCBC ).

This Week's Momentum Zacks Rank Buy Stocks

Heartland Financial USA Inc. 's ( QLTY ) 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. Read the full article.

Carter's, Inc. ( CRI ) reached a new all-time high after reporting yet another strong quarter with earnings that came in 36.6% ahead of the Zacks Consensus Estimate. This branded children's wear marketer has beaten the Zacks Consensus Estimate for seven straight quarters with an average earnings surprise of 27.8%. Read the full article.

A strong first-quarter performance helped shares of Ulta Salon, Cosmetics & Fragrance Inc. ( ULTA ) hit their 52-week high on June 6, 2012. This Zacks #2 Rank (Buy) salon operator looks attractive has now beaten the Zacks Consensus Estimate for seven consecutive quarters, with an average surprise of 12.03%. Read the full article.

Amerisafe Inc. 's ( AMSF ) strong first-quarter performance, which included a 36% earnings surprise, helped its shares hit their 52-week high on May 10, 2012. With a steady uptrend in price, this Zacks #1 Rank (Strong Buy) insurance underwriter looks attractive. Read the full article.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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