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Northeast Community Bancorp Inc. (NECB) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Northeast Community Bancorp (NECB - Free Report) ? Shares have been on the move with the stock up 22.2% over the past month. The stock hit a new 52-week high of $21.22 in the previous session. Northeast Community Bancorp has gained 19.2% since the start of the year compared to the 12.9% move for the Zacks Finance sector and the 2.5% return for the Zacks Banks - Northeast industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 22, 2024, Northeast Community Bancorp reported EPS of $0.97 versus consensus estimate of $0.72 while it beat the consensus revenue estimate by 9.17%.

For the current fiscal year, Northeast Community Bancorp is expected to post earnings of $2.94 per share on $99.23 million in revenues. This represents a -11.45% change in EPS on a -1.69% change in revenues. For the next fiscal year, the company is expected to earn $2.71 per share on $100.97 million in revenues. This represents a year-over-year change of -7.82% and 1.75%, respectively.

Valuation Metrics

Northeast Community Bancorp may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Northeast Community Bancorp has a Value Score of A. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 7.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11.9X. On a trailing cash flow basis, the stock currently trades at 6.3X versus its peer group's average of 9.5X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Northeast Community Bancorp currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Northeast Community Bancorp passes the test. Thus, it seems as though Northeast Community Bancorp shares could have potential in the weeks and months to come.

How Does NECB Stack Up to the Competition?

Shares of NECB have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Pathward Financial, Inc. (CASH - Free Report) . CASH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of B.

Earnings were strong last quarter. Pathward Financial, Inc. beat our consensus estimate by 8.02%, and for the current fiscal year, CASH is expected to post earnings of $6.47 per share on revenue of $750.74 million.

Shares of Pathward Financial, Inc. have gained 16.4% over the past month, and currently trade at a forward P/E of 9.98X and a P/CF of 7.4X.

The Banks - Northeast industry is in the top 27% of all the industries we have in our universe, so it looks like there are some nice tailwinds for NECB and CASH, even beyond their own solid fundamental situation.


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