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A financial holding company, which conducts its operations through its wholly-owned community bank subsidiary, the National Bank of Blacksburg.
I normally wouldn't give a regional bank stock a second look. But, being the micro and small cap enthusiast that I am, in this week's stock screen, I couldn't help but at least take a look at the fundamentals and the future growth and profitability of the bank, ticker symbol NKSH.Let's run down the numbers. The stock's P/E ratio is low in terms of the industry, on the whole at 11.12. And, as one can see, it is currently vastly underperforming the S&P over the course of the last few months. But one simply has to look at the margins on this stock to see the earnings potential and the solid nature of this pick. Compared to industry numbers rating the net profit margins and pre-tax margins at 31.35 and 22.90 (respectively), NKSH blows away the numbers standing at 43.58 and 33.52 percent. Both of those numbers offer a 10 percent premium over the industry, and are also just as high considering the previous five years of the company's reports. Operating margins are also extremely respectable sitting at just over 61 percent.Last quarter, we also saw the bank beat analysts' EPS estimates at $0.45/share, two cents over previous years, showing that these numbers are beginning to pay off for shareholders. For FY 2007, the company expects earnings (along with the Street) to be at 1.81 per share, which may be a low estimate considering the possible growth inferred by the numbers, holding a 3.8 percent growth figure in terms of earnings.Over the past 52 weeks, the stock has seen a double-digit decline, but that makes it only more attractive, as the upside (a new 52 week high) could be in within the stock's grasp when earnings come out later in the month. Coming down to the finish of this pitch, one must consider that this stock is CHEAP. For the access to these bank margins, this stock trades at a high discount at only 1.41 percent over book price. The pick also offers double-digit returns on equity at just over 13 percent return.It just looks like this stock is an anonymous, but powerful name in the sea of banks on the NASDAQ, but really makes one consider that, perhaps, when it comes to some of these regional banks, they may just want to look closer to home.
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