First Financial BanksharesFFIN seems to be an attractive pick now on the back of its top-line strength and solid balance sheet position. Further, its earnings growth prospects and efforts to enhance shareholder value are encouraging.
Having impressed the market by delivering improved second-quarter results, the stock has been breaching 52-week highs for some time now and has potential for further upside, given its strong fundamentals and strong liquidity position.
Further, it has been successful in gaining analysts' confidence in terms of future earnings. The Zacks Consensus Estimate for current-year earnings has been revised 2.8% upward, over the last 30 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Shares of First Financial have gained 32.6% so far this year against slight decline witnessed by the industry it belongs to.
Key Driving Forces
Revenue Strength: First Financial has been witnessing consistent improvement in revenues. Over the past five years (ended 2017), total revenues recorded a compound annual growth rate (CAGR) of 9.1%. Moreover, its revenues are projected to grow 14.9% in 2018.
Impressive Balance Sheet Growth: The company's loans and deposits have witnessed a CAGR of 6.8% and 9.6%, respectively, over a five-year period (ended 2017). Thus, strong balance sheet position enables First Financial to undertake any opportunistic expansion moves.
Inorganic Growth Prospects: Backed by its robust liquidity position, First Financial is poised to grow via acquisitions. In January 2018, it completed the buyout of Commercial State Bank, which helped boost its non-interest revenues source and supported bottom-line growth.
Steady Capital Deployment Activities: The company remains committed to enhancing shareholder value. In April 2018, it raised its quarterly dividend by 10.5% to 21 cents per share. Also, in 2017, it had renewed its stock repurchase program of up to 2 million shares for a three-year period.
Earnings per Share Growth: First Financial has recorded an earnings growth rate of 8.2% over the last three to five years. Further, this earnings momentum is likely to continue in the near term as reflected by the company's projected earnings per share growth rate of 28.8% and 5% in 2018 and 2019, respectively.
Superior Return on Equity: First Financial has a return on equity of 13.29% compared with the industry average of 9.51%. This reflects the company's superiority in utilizing shareholders' funds.
Other Stocks to Consider
Some other stocks in the same space worth considering are BancFirst Corporation BANF , Capital City Bank Group CCBG and Entegra Financial Corp. ENFC . All these stocks carry a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
BancFirst's Zacks Consensus Estimate for current-year earnings has been revised 3.1% upward for 2018, in the last 30 days. Also, its share price has increased 29.9% in the past 12 months.
Capital City Bank's current-year earnings estimates have been revised slightly upward, over the last 30 days. Further, the company's shares have jumped 21.8% in a year.
Entegra's Zacks Consensus Estimate for current-year earnings has been revised nearly 2.4% upward, over the last 30 days. Moreover, in the past year, its shares have gained 24.1%.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportCapital City Bank Group (CCBG): Free Stock Analysis ReportBancFirst Corporation (BANF): Free Stock Analysis ReportFirst Financial Bankshares, Inc. (FFIN): Free Stock Analysis ReportEntegra Financial Corp. (ENFC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research