Why the Upgrade?
Home Bancshares has been witnessing rising earnings estimates on the back of strong first-quarter 2013 results and a recent dividend hike. Opportunistic acquisitions have also been growth drivers. Moreover, this commercial and consumer banking services provider has a year-over-year expected earnings growth rate of 15.0% for 2013.
On Jun 25, Home Bancshares and Liberty Bancshares, Inc. announced the signing of an agreement to merge permanently. Under the terms of the deal, shareholders of Liberty will receive $250 million of Home Bancshares's common shares plus $30 million in cash. The acquisition is expected to be complete in the third or fourth quarter of 2013, subject to regulatory approval.
Home Bancshares reported first-quarter results on Apr 18 with earnings per share of 64 cents, beating the year-ago number of 52 cents by 23.1%. The results were primarily aided by higher net interest income, reduced non-interest expenses and no provision for loan losses. Net interest income jumped 21% year over year to $44.3 million.
On the flipside, non-interest income fell 11% to $9.0 million. Moreover, non-interest expenses increased 6% year over year to $25.9 million.
Along with its earnings release, the company announced its board of directors' approval of a quarterly dividend of 15 cents per share, up 15% from the prior quarter amount. The new dividend was paid on Jun 5, 2013, to shareholders of record as on May 15, 2013. The board of directors has also declared a two-for-one stock split of its common stock payable in the form of a 100% stock dividend. The two-for-one stock split was executed on Jun 12, 2013.
Following first-quarter results, the Zacks Consensus Estimate for 2013 increased 1% to $1.28 per share over the last 60 days. For 2014, the Zacks Consensus Estimate advanced 8% to $1.44 per share.
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