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3 Bank Stocks to Watch

As we head into earnings season investors may want to pay attention to the Financial Sector. Many notable financial players are enjoying favorable estimate revisions.

It should be said that banks may start receiving a boost from higher interest rates in many of their business segments. Let’s take a look at three banks to keep an eye on.  

Bank First National BFC

The first bank on the list to consider is Bank First National (BFC). BFC has many diverse financial accounts including deposits, checking, CDs, money markets, and loan products. Bank First National also offers treasury management services, credit cards, electronic banking services, safe deposit boxes, insurance services, and ATM processing.

Headquartered in Wisconsin, BFC’s Banks-Northeast Industry is in the top 9% of over 250 Zacks Industries. BFC currently sports a Zacks Rank #1 (Strong Buy) with EPS estimate revisions on the rise. Bank First National’s earnings estimates for the current quarter and next quarter have gone up again. This has also led to positive revisions for the current year and FY23.

BFC’s earnings are expected to rise 9% this year and climb another 19% in FY23 at $7.70 a share, based on Zacks estimates. Top line growth is also expected, with sales set to rise 13% this year and another 25% in FY23 to $160.4 million.

Year to date BFC is up +7% to blast the S&P 500’s -21% and its peer groups -6%. BFC has performed well during this year’s high inflationary environment and the company’s growth is reflected in its price performance over the last five years.


Image Source: Zacks Investment Research

From the chart above we can see that BFC has also outperformed the benchmark over the last five years at +54%. This also outperformed its peer group’s -4% drop during this time.

Bank First National currently trades around $77 a share, not too far from its highs, which is no easy task in 2022. At current levels, BFC has a forward P/E of 12.1X. This is above the industry average, but the rising EPS estimates are starting to support investors paying up for BFC. Plus, it’s trading below its decade-long highs of 18.7X and the median of 12.9X.

While lower than the industry average, BFC does offer a 1.27% annual dividend yield at $1.00 per share. BFC’s growth rate for this year and FY23 at 19% is higher than its highly-ranked industry. And the average Zacks Price target of $91.00 suggests 16% upside from current levels.

First Northwest Bancorp FNWB

With the Banks-West Industry being in the top 10% out of 251 Zacks Industries investors should keep an eye on First Northwest Bancorp (FNWB). FNWB also sports a Zacks Rank #1 (Strong Buy) with earnings estimate revisions trending higher for FY23.

First Northwest Bancorp is the bank holding company for First Federal Savings and Loan Association of Port Angeles. The company offers checking, savings, money market accounts, CDs, and commercial lending products. First Northwest Bancorp also offers electronic banking and online banking services.

While earnings are expected to be down -15% in 2022 a rebound in FY23 is expected. FNWB’s FY23 earnings are expected to climb 71% at $2.40 a share from $1.40 in FY22, based on Zacks estimates. Sales are expected to be up 10% this year and another 17% in FY23 to $95.46 million. As First Northwest Bancorp adjusts to the current high inflationary conditions, its earnings appear poised to adjust with its top-line growth.

FNWB is up +27% year to date blasting the benchmark and its peer group’s -8% decline. Plus, over the last two years, FNWB is up +135% vs. the S&P 500’s +11%. This also outpaced its peer group’s +66%. Despite the incredible run, FNWB still looks attractive at current levels. 


Image Source: Zacks Investment Research

Trading around $16 a share, FNWB has a forward P/E of 11.3X. This is higher than the industry average of 9.6X. With that being said, FNWB’s FY23 expected growth rate is 71% and trumps its peer group’s 15%. Even better, the stock is trading at a discount to its decade high of 21.5X and the median of 13.7X.

The average Zacks Price Target of $21 a share still suggests 31% upside from current levels. FNWB’s dividend is lower than the industry average but does offer investors a 1.76% annual yield at $0.28 per share.  

SmartFinancial SMBK

Another bank seeing revisions to the upside before it reports Q3 earnings later this month is SmartFinancial (SMBK). SmartFinancial provides banking services to individuals and corporations through its subsidiaries SmartBank and Cornerstone Community Bank.

SMBK provides deposit products, loan products, and e-banking services consisting of online bill payments, smart pay, mobile banking, and debit and credit cards.

SMBK is also in the top-rated Banks-Northeast Industry. Although the stock is down -8% YTD, it has outperformed the benchmark and roughly matched its peer groups -6%.


Image Source: Zacks Investment Research

Plus, over the last two years, SMBK is up +69% to crush the S&P 500’s +11% and its peer groups +52%. SMBK’s $25 price tag may attract some investors looking for a more affordable option among the Banks-Northeast Industry which is in the top 9%.

SMBK has a forward P/E of 9.6X. This is near the industry average and well below its decade high of 28.1X and median of 12.3X. SMBK’s 27% growth rate over the last five years has also outpaced the industry.

SMBK currently lands a Zacks Rank #1 (Strong Buy) and the average Zacks Price Target offers 25% upside. Although below the industry average,SMBK also offers investors a 1.11% annual dividend yield at $0.28 per share.

Bottom Line

Earnings estimate revisions trending higher is a good sign for the Financial sector. This shows banks are starting to adapt to higher interest rates and use them to their advantage. Many regional banks will be beneficiaries and are trading at a discount relative to their past.

Now may be the time for investors to keep an eye out for opportunities among bank stocks.  


 


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SmartFinancial, Inc. (SMBK): Free Stock Analysis Report
 
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Bank First National Corporation (BFC): Free Stock Analysis Report
 
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