Underlying strength and earnings growth prospects make Sierra Bancorp (NASDAQ:BSRR) a solid bet now. Impressive organic growth, improving credit quality and capital strength are expected to benefit the stock further.
The company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 5.2%.
Further, its current-year earnings estimates have been revised 2.7% upward over the past 30 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Shares of Sierra Bancorp have gained 14% so far this year compared with the industry’s growth of 17.1%.
What Makes the Stock Attractive
Revenue Strength: The company has been witnessing consistent improvement in revenues. Over the past three years (ended 2018), total revenues recorded a compound annual growth rate (CAGR) of 14.6%.
The uptrend is expected to continue in 2019 at a rate of 5.28%, with support from higher interest income and Sierra Bancorp’s efforts to grow fee income.
Impressive Balance Sheet Growth: Sierra Bancorp’s loans and deposits have witnessed a CAGR of 17.2% and 11.7%, respectively, over a three-year period (ended 2018). Also, both loan and deposit balances are likely to get support from an improving economy.
Improving Credit Quality: Sierra Bancorp’s credit quality has improved significantly over the years. In 2018, the ratio of non-performing loans to total loans contracted to 0.3% from 0.5% in 2016. Also, non-performing assets declined 27.4% in the same time period.
Earnings per Share Growth: Sierra Bancorp recorded an earnings growth rate of 16.3% over the last three to five years compared with the industry’s growth of 16.09%. This earnings momentum is likely to continue in 2019 as reflected by the company’s projected earnings per share growth rate of 18.6%.
Superior Return on Equity: Sierra Bancorp has a return on equity of 11.95% compared with the industry average of 11.32%. This indicates that the company is efficient in utilizing shareholder funds.
Strong Leverage: Sierra Bancorp's debt/equity ratio is 0.12 compared with the industry average of 0.13. The relatively strong financial health of the company will help it perform better than its peers in an unstable business environment.
Other Stocks to Consider
Some other stocks in the same space worth considering are FS Bancorp, Inc. (NASDAQ:FSBW) , Luther Burbank Corporation (NASDAQ:LBC) and Customers Bancorp, Inc (NYSE:CUBI) . All these stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FS Bancorp’s Zacks Consensus Estimate for current-year earnings has been revised upward for 2019 in the past 30 days. Also, its share price has increased 39.9% so far this year.
Luther Burbank’s current-year earnings estimates have been revised upward over the past 30 days. Further, the company’s shares have jumped 27.9% year to date.
Customers Bancorp’s Zacks Consensus Estimate for current-year earnings have been revised upward over the past 60 days. Moreover, so far this year, its shares have gained 31.8%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Customers Bancorp, Inc (CUBI): Free Stock Analysis Report
Sierra Bancorp (BSRR): Free Stock Analysis Report
FS Bancorp, Inc. (FSBW): Free Stock Analysis Report
Luther Burbank Corporation (LBC): Free Stock Analysis Report
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