German American Bancorp, Inc.GABC has grown organically and inorganically over the years on the back of its strong capital position. Improving credit quality is another positive factor. Further, the company’s earnings growth prospects are impressive.
German American’s shares have gained 8.9% year to date, outperforming the industry ‘s rally of 2.4%.
Also, the company’s Zacks Consensus Estimate for current-year earnings have remained stable over the last 30 days. Currently, the stock carries a Zacks Rank #2 (Buy).
Earnings Strength: Over the past three to five years, German American witnessed earnings per share (EPS) growth of 6.3%. The company also recorded an average positive earnings surprise of 5.5% over the trailing four quarters.
Also, its long-term (three to five years) estimated EPS growth rate is 9.5%.
Solid Inorganic Growth Strategies: German American’s capital strength has been helping it to grow inorganically. As part of this strategy, the company acquired River Valley Bancorp and its subsidiaries, including River Valley Financial Bank, in March 2016. The deal strengthened the company’s balance sheet.
Revenue Growth: The company continues to make steady progress toward improving its top line. Its revenues recorded a three-year (ended 2016) CAGR of around 9.6%. Further, its projected revenue growth (F1/F0) of 6.3% (as against the industry average of about nearly 2.6%) indicates consistent upward momentum in revenues.
Improved Credit Quality: German American’s credit quality has improved significantly as reflected by its provision for loan losses and non-performing assets declining 50.2% and 66.4%, respectively, over the last five years (ended 2016).
Superior Return on Equity (ROE): With a ROE of 11.60% compared with the industry average of 9.44%, the company appears to reinvest its cash more efficiently.
Other Stocks to Consider
Some of the other financial stocks worth considering are Synovus Financial Corp. SNV , Horizon Bancorp HBNC and United Community Banks, Inc. UCBI . All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Synovus’ current-year earnings estimates have been revised slightly upward over the past 60 days.
Horizon’s Zacks Consensus Estimate for earnings has moved slightly upward over the past 60 days, for the current year.
United Community’s current-year earnings estimates have been revised nearly 1.6% upward, over the past 60 days.
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German American Bancorp, Inc. (GABC): Free Stock Analysis Report
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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.