Yahoo Finance 5 Reasons to Buy Provident Financial (PFS) Stock Right Now
Provident Financial Services PFS is well-positioned for growth driven by the acquisition of Lakeland Bancorp, Inc. Decent loan demand, solid balance sheet and high interest rates will also continue to support the company’s financials.
Analysts are optimistic regarding its earnings growth potential. Over the past two months, the Zacks Consensus Estimate for Provident Financial’s earnings has remained unchanged for 2024 and revised 5.8% upward for 2025. The company currently carries a Zacks Rank #2 (Buy).
Over the past year, shares of Provident Financial have lost 8.2% against no change for the industry it belongs to.
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Here are some of the factors that make PFS stock a solid pick right now.
Acquisition of Lakeland Bancorp: Earlier this month, PFS completed the merger with Lakeland Bancorp, Inc. This combined two of New Jersey’s complementary banking platforms to form a super-community bank.
On a pro-forma basis, the combined company will have $24.5 billion in assets, $18.8 billion in loans, $18.6 billion in deposits and total stockholders’ equity of $2.3 billion. The combined entity will have 140 branches across New Jersey and parts of New York and Pennsylvania.
The combined franchise will benefit from incremental revenue growth opportunities. It will include Provident Financial’s fee-based insurance and wealth management businesses, as well as Lakeland Bancorp’s growth in asset-based lending, equipment lease financing and mortgage warehouse lending.
The system conversions are scheduled for early September 2024. Until then, the companies’ retail banking networks will operate separately under their respective brands.
Earnings Growth: In the last three to five years, Provident Financial’s earnings witnessed a CAGR of 5.7%. While earnings will likely decline 5.2% in 2024, it will rebound and grow 33.8% next year.
Also, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 9.41%.
Revenue Strength: PFS has been witnessing a steady improvement in revenues. The company’s revenues witnessed a CAGR of 5.9% over the last four years (2018-2023). This was driven by solid loan demand, high rates and non-interest income growth.
Total revenues are projected to increase 40.3% this year and 24.6% in 2025.
Capital Distribution: Provident Financial has been regularly paying quarterly dividend of 24 cents per share. Based on the last day’s closing price of $15.01, the dividend yield currently stands at 6.4%. Further, it has a share repurchase plan in place. As of Mar 31, 2024, nearly 1.0 million shares remained available under the current stock repurchase authorization.
Given the solid liquidity position and earnings strength, the company will be able to sustain its current capital distribution activities.
Stocks Seems Undervalued: Provident Financial’s stock seems undervalued as its price-to-earnings (F1) and price-to-book ratios of 9.18 and 0.67, respectively, are well below the industry averages of 11.98 and 0.74.
Further, it has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. 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 bank stocks are First BanCorp. FBP and First Financial Bancorp. FFBC.
Estimates for First BanCorp’s earnings for the current year have moved 9.3% north in the past 30 days. The company’s shares have risen 19.9% over the past six months. At present, FBP carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estimates for First Financial Bancorp’s 2024 earnings have been revised 5.2% upward in the past month. The company’s shares have rallied 10% over the past six months. Currently, FFBC also carries a Zacks Rank #2.
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First Financial Bancorp. (FFBC) : Free Stock Analysis Report
Provident Financial Services, Inc (PFS) : Free Stock Analysis Report
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