Why 1st Source Corporation (SRCE) Stock Is A Solid Bet Now
Zacks Investment Research | Aug 22, 2017 09:47PM ET
With record earnings and revenues, along with loans and deposit balances in the first six months of 2017, 1st Source Corporation (NASDAQ:SRCE) appears a solid bet now. The company’s rising net interest margin and fee income are anticipated to yield positive results for the stock.
Further, the recent interest rate hikes are likely to bring further stability to top-line generation, in turn, creating buying opportunity for long-term horses. Though escalating costs might lead to operational inefficiency, sharper focus on organic growth will likely make the growth path smoother for the company.
Notably, 1st Source Corporation has a number of other aspects that make it an attractive investment option.
Why is 1st Source Corporation (SRCE) an Attractive Pick
Strong Organic Growth: 1st Source Corporation’s revenues witnessed 4.8% compounded annual growth rate (CAGR) over the last three years, ending 2016. The company’s projected sales growth (F1/F0) of 8%, as against the 2.6% industry average, highlights consistent upward momentum in revenues.
Earnings per Share Strength: 1st Source Corporation witnessed earnings growth of 4.93% in the last three-five years. This earnings momentum is likely to continue in the near term as reflected by the company’s projected earnings per share (EPS) growth rate (F1/F0) of 17.12%.
Also, the company’s long-term (three-five years) estimated EPS growth rate of 10% promises rewards for investors over the long run. Good news is that the company recorded an average positive earnings surprise of 2.98% over the trailing four quarters.
Strong Leverage: 1st Source Corporation’s debt/equity ratio is valued at 0.18 compared to the industry average of 0.46, indicating relatively lower debt burden. It highlights the financial stability of the company despite an unstable economic environment.
Favorable Zacks Rank: 1st Source Corporation currently carries a Zacks Rank #2 (Buy). The bullish rank has been driven by upward earnings estimate revisions over the last 30 days. For 2017, the Zacks Consensus Estimate moved up 3.6% to $2.60, while for 2018, it climbed 2.4% to $2.93.
Stock is Undervalued: 1st Source Corporation has P/E and P/B ratios of 17.62 and 1.70 compared to the S&P 500 average of 18.72 and 3.04, respectively. Based on these ratios, the stock seems undervalued.
Share Price Movement: 1st Source Corporation’s shares have gained nearly 34.2% in the past year compared with 16.3% growth recorded by the Original post
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