3 Reasons to Invest in Old National Bancorp (ONB) Stock Now

It seems to be the perfect time to invest in bank stocks. Supported by interest rate hikes and decent growth in loan balances, banks are expected to witness improvements in their top lines. So, we bring one such stock — Old National Bancorp ONB — that is a solid pick right now based on its fundamental strength and improving prospects.

The company has been witnessing upward earnings estimate revisions of late, reflecting that analysts are optimistic regarding its earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for ONB’s current-year earnings has moved 1.5% upward. As a result, the company currently carries a Zacks Rank #2 (Buy).

Over the past three months, shares of the company have gained 18.6%, outperforming the industry’s rise of 9.7%.


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Image Source: Zacks Investment Research


Some other factors are mentioned below, which make ONB stock an attractive investment option now.

Inorganic Growth Strategy: Old National Bancorp has been growing through acquisitions. In February 2022, it acquired First Midwest Bancorp, Inc. In 2018, the bank completed the deal to acquire Minnesota-based Klein Financial, Inc. for roughly $406 million. In 2017, ONB acquired Anchor Bancorp, Inc.

The deals, along with several past acquisitions, have been accretive to the company’s earnings and supported ONB’s financials amid a tough economic backdrop. Given a strong balance sheet position, Old National Bancorp is expected to continue undertaking such deals.

Earnings Strength: Old National Bancorp witnessed earnings per share growth of 10.6% in the last three to five years. While the company’s earnings are projected to decline 23.7% in 2022, the trend will likely reverse after that. In 2023, ONB’s earnings are expected to grow 54.9%.

Old National Bancorp has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average surprise of 12.7%.

Revenue Growth: Old National Bancorp’s revenues have seen a compound annual growth rate of 4.3% over the last six years (2016-2021). The upward momentum continued in the first half of 2022.

Driven by higher rates and loan growth, the company’s top line is expected to improve further. Its projected sales growth rates of 93.8% and 10.6% for 2022 and 2023, respectively, ensure the continuation of the upward revenue trend.

Other Stocks Worth Considering

A couple of other top-ranked stocks from the same space are Associated Banc-Corp ASB and German American Bancorp, Inc. GABC.

Associated Banc-Corp’s earnings estimates have moved 12.3% upward over the past 60 days. Its share price has risen 14% in the past three months. ASB currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

German American Bancorp’s earnings estimates for 2022 have been revised 7.6% upward over the past 60 days. Its share price has increased 4.5% in the past three months. GABC also sports a Zacks Rank #1 at present.

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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 Nasdaq, Inc.

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