Despite the coronavirus outbreak-led chaos, it seems to be a wise idea to add Cambridge Bancorp CATC to your portfolio at the moment. The factors that might drive the stock higher include impressive organic growth, efforts to grow presence and capital strength.
The company has been successful in gaining analysts’ confidence. Its current-year earnings estimates have been revised 21.4% upward over the past 30 days. As a result, the company currently carries a Zacks Rank #2 (Buy).
Shares of Cambridge have declined 25.1% over the past six months compared with the industry’s fall of 27.6%.
What Makes the Stock Attractive
Revenue Strength: The company has been witnessing consistent improvement in revenues. Over the past five years (ended 2019), total revenues recorded a compound annual growth rate (CAGR) of 10.4%.
Additionally, the upward trend is expected to continue in 2020 at a growth rate of 34.9%, with support from loan growth and Cambridge’s efforts to grow fee income.
Solid Inorganic Growth Strategies: Cambridge’s capital strength has been helping it to grow inorganically. As part of the strategy, the company recently completed the acquisition of Wellesley Bancorp and also acquired Optima Bank & Trust Company in April 2019. The deal bolstered Cambridge’s presence in the Greater Boston and New Hampshire.
Steady Capital Deployment Activities: The company remains committed to enhancing shareholder value. Notably, it has been raising the quarterly dividend every year since 2015. The recent hike was declared in January 2020 by 3.9% to 53 cents per share.
Impressive Balance Sheet Growth: Cambridge’s loans and deposits witnessed a CAGR of 16.9% and 10.9%, respectively, in a five-year period (ended 2019). Also, both loan and deposit balances are likely to continue improving.
Superior Return on Equity: The company has a return on equity of 10.25% compared with the industry average of 8.46%. This indicates that it is efficient in utilizing shareholder funds.
Strong Leverage: Cambridge’s debt/equity ratio is 0.13 compared with the industry average of 0.36. The relatively strong financial health of the company will likely help it perform better than its peers under an unstable business environment.
Other Stocks to Consider
Independent Bank Corporation’s IBCP current-year earnings estimates have moved 37.4% north in the past 60 days. Further, the company’s shares have declined 36.6% in the year-to-date period. At present, it has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Old Second Bancorp OSBC has witnessed an upward earnings estimate revision of nearly 40% for 2020 in the past 60 days. Moreover, the Zacks Rank #2 stock has lost 39.8% in the year-to-date period.
First Western Financial’s MYFW earnings estimates have moved significantly upward for 2020 in the past 60 days. Moreover, the Zacks #1 Ranked stock has lost 15.2% in the year-to-date period.
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Old Second Bancorp, Inc. (OSBC): Free Stock Analysis Report
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