Associated Banc-Corp (ASB) Hikes Dividend: Should You Buy?
Zacks Investment Research | Feb 06, 2018 09:22PM ET
Associated Banc-Corp (NYSE:ASB) announced a 7.1% hike in its quarterly cash dividend. The new dividend of 15 cents per share will be paid on Mar 15 to shareholders on record as of Mar 1.
Based on yesterday’s closing price of $24.25 per share, the dividend yield is 2.47%.
The hike comes after the company increased its dividend by 16.7% in October 2017. In fact, given a solid capital and liquidity position, the company is expected to continue enhancing shareholder value through efficient capital-deployment activities.
However, is it worth considering Associated Banc-Corp stock for earning this dividend income?
Let’s delve deeper into its financial performance and fundamentals to understand the risk and reward.
Revenues: Driven by continued growth in loans, the company’s revenues have witnessed a CAGR of 4.5% over the last five years (2013-2017). Moreover, its projected sales growth of 13.2% and 4.9% for 2018 and 2019, respectively, ensures the continuation of uptrend in revenues.
Earnings: Over the last three-five years, the company has witnessed earnings per share (EPS) growth of nearly 6.7%. Also, the company is expected to deliver a strong earnings performance as indicated by its projected EPS growth of nearly 16% for 2018 and 9.3% for 2019.
Notably, its acquisition of Whitnell & Co. and Bank Mutual are also expected to be accretive to its 2018 and 2019 earnings, respectively.
Valuation: Associated Banc-Corp stock looks undervalued based on its price-to-book (P/B) and price-to-sales (P/S) ratios. The company currently has a P/B ratio of 1.22 and a P/S ratio of 3.48, which are below the industry averages of 1.57 and 3.49, respectively.
Leverage: Associated Banc-Corp has a debt/equity ratio of 1.10, which compares unfavorably with the industry average of 0.45. This indicates that the company has a higher debt burden relative to the industry.
Return on Equity (ROE): The company’s ROE of 8.05% is lower than the industry average of 9.43%. This reflects that it is less efficient in utilizing shareholder funds compared with its peers.
Expenses: Over the last five years (2013–2017), the company’s expenses have witnessed a CAGR of nearly 1%. The rise has been primarily due to higher personnel costs and FDIC expenses. Moreover, given the company’s efforts to grow inorganically and its continued investment in franchise, expenses are expected to increase further.
Share Price Movement: The company’s price performance does not look impressive. Its shares have gained only 2.8% in 2017, underperforming 4.6% growth for the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.