Yahoo Finance Here's Why Associated Banc-Corp (ASB) is Worth Buying Now
Associated Banc-Corp ASB is well-positioned for growth on the back of initiatives to augment loans and deposit balances, high interest rates, solid liquidity and non-interest income growth.
Over the past 30 days, the Zacks Consensus Estimate for 2024 and 2025 earnings has moved marginally upward. ASB currently carries a Zacks Rank #2 (Buy).
Over the past year, shares of Associated Banc-Corp have gained 26.8%, outperforming the industry’s rise of 24.3%.
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Let’s dive deeper into the factors that make ASB stock worth betting on now.
Earnings Growth: Associated Banc-Corp witnessed earnings growth of 9.4% over the past three to five years. This was driven by the company’s organic growth strategy, solid customer relationships and strategic initiatives to boost operating efficiency.
Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, met in one and lagged in one, with the average beat being 0.74%.
Our projections for earnings indicate a 9.3% decline in 2024 and a subsequent recovery in 2025 and 2026, with year-over-year growth of 12.6% and 2.6%, respectively.
Revenue Strength: Driven by robust loans and deposits and efforts to boost fee income, Associated Banc-Corp’s total revenues witnessed a compound annual growth rate (CAGR) of 3.2% over the last six years (2017-2023). Though the trend reversed in the first quarter of 2024, organic growth measures and a high interest rate scenario will likely support top-line expansion.
Further, the balance sheet repositioning undertaken in the fourth quarter of 2023 and stabilizing deposit costs are likely to boost the net interest margin.
Additionally, phase 2 of the company’s strategic plan to boost its loans and deposit balance by 2025 via customer acquisition and deepening relationships will further drive revenue growth. In November 2021, the company announced phase 1 of the strategic plan, which resulted in growth of its lending capabilities.
Our estimates for total revenues indicate roughly 1% growth in 2024, with a more pronounced improvement of 5.2% and 2% in 2025 and 2026, respectively.
Strong Balance Sheet: As of Mar 31, 2024, ASB’s cash and due from banks and interest-bearing deposits in other financial institutions were $850 million, while total debt was $1.87 billion. The company has investment-grade long-term ratings of Baa3 and BBB- from Moody’s and Standard and Poor's, respectively. Hence, a solid liquidity position allows the company to address its near-term debt obligations.
Impressive Capital Distributions: Associated Banc-Corp’s capital distribution activities are encouraging. The company has been hiking dividends regularly, with the most recent hike announced in October 2023. The company has a share repurchase plan in place. As of Mar 31, 2024, roughly $79 million worth of shares remained available under the authorization.
Given its decent earnings strength and strong liquidity position, the company is expected to continue efficient capital distributions, thus enhancing shareholder value.
Stock Seems Undervalued: ASB’s price-to-book and price-to-earnings (F1) ratios of 0.78 and 9.65 are well below the industry average of 1.00 and 9.92, respectively. Also, the stock has a Value Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Bank Stocks to Consider
Some other top-ranked stocks from the banking space worth a look are First Western Financial, Inc. MYFW and Commerce Bancshares, Inc. CBSH.
The Zacks Consensus Estimate for MYFW’s current-year earnings has moved 9.6% north over the past 30 days. Shares of the company have lost 5.5% in the past six months. At present, MYFW sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CBSH’s 2024 earnings has moved 1.4% upward in the past month. Over the past six months, shares of the company have gained 2.7%. At present, CBSH carries a Zacks Rank #2.
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Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
Associated Banc-Corp (ASB) : Free Stock Analysis Report
First Western Financial, Inc. (MYFW) : Free Stock Analysis Report
