On Tuesday, Stephens initiated coverage on Southern Missouri Bancorp (NASDAQ:SMBC), assigning the stock an Overweight rating and setting a price target of $60.00.
The firm highlighted Southern Missouri Bancorp's consistent profitability, marked by robust return on average assets (ROAA), efficiency, and tangible book value per share (TBVPS) growth over the past decade.
The company's focus on maintaining high credit quality was also noted, with net charge-offs (NCOs) averaging just 4 basis points over the last ten years.
Southern Missouri Bancorp, which went public in 1994, has shown a compound annual growth rate (CAGR) of 10% in its stock price, outpacing the BANK index's 6% CAGR during the same period. The bank's relative outperformance has been particularly strong since 2011.
Stephens pointed to easing deposit pricing pressures and the continued repricing of earning assets as factors that could lead to net interest margin (NIM) expansion in the near term.
The analysis also suggested that Southern Missouri Bancorp is likely to experience benefits from lower interest rates, which could further accelerate NIM performance.
Additionally, the bank's position in fragmented markets and a history of active acquisitions were cited as advantageous for potential bank mergers and acquisitions (M&A) activity.
Stephens' positive outlook on Southern Missouri Bancorp is based on the bank's historical performance indicators and strategic positioning for growth.
The Overweight rating indicates the firm's expectation that the stock will outperform the average return of the stocks the firm covers over the next 12 to 18 months. The $60 price target reflects the firm's confidence in the bank's potential for continued financial success and market outperformance.
In other recent news, Southern Missouri Bancorp reported a rise in profitability for the June quarter, marking the end of their fiscal year. The company declared a 9.5% hike in their quarterly dividend and reported robust loan growth.
The full fiscal year earnings were $4.42 per share, up from $3.85 in the previous year. The company's net interest margin and non-interest income increased, while expenses slightly decreased.
Southern Missouri Bancorp anticipates loan growth and aims to expand their credit portfolio in the next fiscal year. The company is also exploring potential mergers and acquisitions to achieve scale in target markets.
Despite a decrease in earnings per share for the quarter compared to the same period last year, the company reported an increase in profitability in a challenging rate environment.
These recent developments reflect Southern Missouri Bancorp's resilience and strategic growth in the current economic climate. The company's focus on loan growth and potential market expansion through mergers and acquisitions, along with maintaining strong credit quality, positions it well for the future.
InvestingPro Insights
In alignment with Stephens' optimistic coverage, Southern Missouri Bancorp (NASDAQ:SMBC) exhibits financial metrics that could interest investors seeking stable growth. InvestingPro data shows a healthy market capitalization of $560.17 million and a P/E ratio standing at 10.89, which suggests that the stock is trading at a reasonable valuation relative to its near-term earnings growth. The company's revenue has grown by almost 30% in the last twelve months as of Q3 2024, a testament to its robust performance in the financial sector.
InvestingPro Tips reveal a mixed picture but with noteworthy highlights. Southern Missouri Bancorp has raised its dividend for 12 consecutive years and has maintained dividend payments for 30 consecutive years, indicating a strong commitment to returning value to shareholders. Additionally, the company has been profitable over the last twelve months, and analysts predict it will remain profitable this year. The bank's strong return over the last three months, with a 19.08% total price return, aligns with the positive sentiment expressed by Stephens.
For investors looking for more detailed analysis and additional insights, there are more InvestingPro Tips available at https://www.investing.com/pro/SMBC. These tips provide further context to Southern Missouri Bancorp's financial health and future prospects, which may help investors make more informed decisions.
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