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Butterfield Rewards Shareholders, Unveils Share-Buyback Plan

Zacks Equity Research

Bank of N.T. Butterfield & Son Limited NTB continues to reward its shareholders through dividend hikes or additional share repurchases. The company recently announced its latest share-buyback plan with authorization to repurchase 3.5 million shares through Feb 28, 2021.

Notably, the new plan will come into effect once Butterfield completes the previous authorization of 2.5 million ordinary shares, announced last December. The existing plan has around 225,000 shares remaining.

Butterfield has also been paying quarterly dividends, along with regular hikes. Since 2016, the company has raised its dividend four times. The dividend was last hiked in February 2019 by 15.8% to 44 cents per share.

With strong liquidity and balance-sheet position, we believe Butterfield will keep rewarding its shareholders in the upcoming period as well. So, keeping this in mind, is the company worth considering? Let’s dig deeper into its financials and fundamental strengths.

Revenue Growth: Organic growth is a key driver for Butterfield, with its sales witnessing a compound annual growth rate of 10.5% over the four-year period (2015-2018). The company’s projected sales growth (F1/F0) of 4.67% (against nil industry average) indicates continued improvement in revenues.

Earnings Strength: Butterfield’s long-term (three-five years) estimated EPS growth rate of 6% promises rewards for investors, over the long run. Also, the company recorded average positive earnings surprise of 2.82% over the trailing four quarters.

Superior Return on Equity: Butterfield has a return on equity of 22.09% compared with the industry average of 11.4%. This indicates that the company is efficient in utilizing shareholder funds.

Strong Leverage: Butterfield’s debt/equity ratio is valued at 0.15 compared with the industry average of 0.80, indicating a relatively lower debt burden. It highlights the company’s financial stability.

Butterfield’s shares have depreciated around 2.5% on the NYSE, in the past six months, compared with the industry’s decline of 1.9%. Despite a dismal price performance, the stock looks overvalued, with respect to its price-to-earnings (P/E) and price-to-book (P/B) ratios. It has a P/E (F1) ratio of nearly 10.34 compared with the industry’s average of 9.99. Furthermore, the company’s P/B ratio of 1.96 comes in above the industry average of 0.91. The stock currently carries a Zacks Rank #4 (Sell).



Stocks to Consider

KB Financial Group Inc KB has been witnessing upward estimate revisions for the past 60 days, with the company’s shares appreciating nearly 1.3% on the NYSE, in six months’ time. It sports a Zacks Rank of 1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lloyds Banking Group PLC LYG has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has jumped around 4.8%, over the last six months. The stock carries a Zacks Rank of 2 (Buy), currently.

Barclays PLC BCS has been witnessing upward estimate revisions for the past 60 days. In addition, the company’s shares have gained 12.1%, over the last six months. At present, it carries a Zacks Rank of 2.

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Barclays PLC (BCS) : Free Stock Analysis Report
 
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Bank of N.T. Butterfield & Son Limited (The) (NTB) : Free Stock Analysis Report
 
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