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Here's Why Origin Bancorp (OBK) is a Must-Buy Stock Now
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Origin Bancorp, Inc. (OBK - Free Report) is well-positioned for growth on the back of decent loans and deposit balance, and strategic initiatives. Further, the current high interest rate environment aids its financials.
Analysts are also optimistic about the stock’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for 2024 and 2025 earnings has moved 9.1% and 8% upward, respectively. OBK currently sports a Zacks Rank #1 (Strong Buy).
Over the past three months, shares of Origin Bancorp have rallied 7.4%, outperforming the industry’s growth of 4.9%.
Image Source: Zacks Investment Research
Let’s dive deeper into the reasons that make OBK stock a lucrative bet now.
Earnings Growth: Origin Bancorp witnessed earnings growth of 14.62% over the past three to five years, significantly outperforming the industry average of 7.30%. This was driven by decent top-line growth and prudent expense management.
Also, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three and lagged in one of the trailing four quarters, the average beat being 8.04%.
Moreover, the company’s investments in new markets, alongside efforts to revamp its mortgage business, are likely to keep the earnings strength intact going forward.
The Zacks Consensus Estimate for earnings indicates a marginal increase in 2024 and a 7.6% rise in 2025.
Revenue Strength: Driven by continued growth in net interest income (NII), Origin Bancorp’s revenues witnessed a compound annual growth rate (CAGR) of 12.9% over the last four years (2019-2023). Revenues declined in the first quarter of 2024 mainly because of lower NII. The company’s acquisition of BT Holdings, Inc. in 2022 enhanced its footprint and remains accretive to its revenue growth. This, along with organic growth measures and higher interest rates, is likely to aid top-line expansion in the near future.
The Zacks Consensus Estimate for revenues indicates 2% growth in 2024 and a 6.2% rise in 2025 on a year-over-year basis.
Strong Balance Sheet: As of Mar 31, 2024, OBK’s total cash and cash equivalents were $291.5 million and total debt (comprising accrued expenses and other liabilities and FHLB advances, repurchase obligations and other borrowings) was $147.4 million. Also, total loans held for investments and total deposits witnessed a CAGR of 16.6% and 18.2%, respectively, over the last four years ended 2023. The uptrend continued for both metrics in the first quarter of 2024.
Further, the strategic move to sell MSR assets further strengthened the balance sheet, removing volatility and reducing regulatory risks.
Additionally, Origin Bancorp’s debt/equity ratio is 0.16, while that for the industry is 0.26. This shows that the company uses less debt to finance its operations. Thus, it will be financially stable even in adverse economic conditions.
Stock Seems Undervalued: Origin Bancorp’s stock seems undervalued as its price-to-book and price-to-sales ratios of 0.90 and 1.61, respectively, are below the industry averages of 0.95 and 1.76.
The Zacks Consensus Estimate for FXNC's current-year earnings has been revised 3.4% upward over the past month. Shares of the company have fallen 16.4% in the past six months.
Estimates for TXBC’s 2024 earnings have been revised 10.1% upward over the past month. Over the past six months, shares of the company have gained 26.5%.
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Here's Why Origin Bancorp (OBK) is a Must-Buy Stock Now
Origin Bancorp, Inc. (OBK - Free Report) is well-positioned for growth on the back of decent loans and deposit balance, and strategic initiatives. Further, the current high interest rate environment aids its financials.
Analysts are also optimistic about the stock’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for 2024 and 2025 earnings has moved 9.1% and 8% upward, respectively. OBK currently sports a Zacks Rank #1 (Strong Buy).
Over the past three months, shares of Origin Bancorp have rallied 7.4%, outperforming the industry’s growth of 4.9%.
Image Source: Zacks Investment Research
Let’s dive deeper into the reasons that make OBK stock a lucrative bet now.
Earnings Growth: Origin Bancorp witnessed earnings growth of 14.62% over the past three to five years, significantly outperforming the industry average of 7.30%. This was driven by decent top-line growth and prudent expense management.
Also, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three and lagged in one of the trailing four quarters, the average beat being 8.04%.
Moreover, the company’s investments in new markets, alongside efforts to revamp its mortgage business, are likely to keep the earnings strength intact going forward.
The Zacks Consensus Estimate for earnings indicates a marginal increase in 2024 and a 7.6% rise in 2025.
Revenue Strength: Driven by continued growth in net interest income (NII), Origin Bancorp’s revenues witnessed a compound annual growth rate (CAGR) of 12.9% over the last four years (2019-2023). Revenues declined in the first quarter of 2024 mainly because of lower NII. The company’s acquisition of BT Holdings, Inc. in 2022 enhanced its footprint and remains accretive to its revenue growth. This, along with organic growth measures and higher interest rates, is likely to aid top-line expansion in the near future.
The Zacks Consensus Estimate for revenues indicates 2% growth in 2024 and a 6.2% rise in 2025 on a year-over-year basis.
Strong Balance Sheet: As of Mar 31, 2024, OBK’s total cash and cash equivalents were $291.5 million and total debt (comprising accrued expenses and other liabilities and FHLB advances, repurchase obligations and other borrowings) was $147.4 million. Also, total loans held for investments and total deposits witnessed a CAGR of 16.6% and 18.2%, respectively, over the last four years ended 2023. The uptrend continued for both metrics in the first quarter of 2024.
Further, the strategic move to sell MSR assets further strengthened the balance sheet, removing volatility and reducing regulatory risks.
Additionally, Origin Bancorp’s debt/equity ratio is 0.16, while that for the industry is 0.26. This shows that the company uses less debt to finance its operations. Thus, it will be financially stable even in adverse economic conditions.
Stock Seems Undervalued: Origin Bancorp’s stock seems undervalued as its price-to-book and price-to-sales ratios of 0.90 and 1.61, respectively, are below the industry averages of 0.95 and 1.76.
Other Stocks to Consider
A couple of other stocks from the banking space worth a look are First National Corporation (FXNC - Free Report) and Third Coast Bancshares, Inc. (TCBX - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FXNC's current-year earnings has been revised 3.4% upward over the past month. Shares of the company have fallen 16.4% in the past six months.
Estimates for TXBC’s 2024 earnings have been revised 10.1% upward over the past month. Over the past six months, shares of the company have gained 26.5%.