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Here's Why Community Financial (CBU) Stock is a Must Buy Now
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Community Financial System, Inc. (CBU - Free Report) is well-positioned for growth driven by decent loan growth, high interest rates and strategic acquisitions. Moreover, solid liquidity and product expansion efforts support its financials.
Over the past 30 days, the Zacks Consensus Estimate for 2024 and 2025 earnings has moved 4% and 5.2% north, respectively. CBU currently sports a Zacks Rank #1 (Strong Buy).
Over the past year, shares of Community Financial have gained 9.2%.
Let’s dig deeper into the factors that make CBU stock worth buying now.
Earnings Growth: Community Financial witnessed earnings growth of 1.1% over the past three to five years. This was largely driven by the company’s organic growth strategy, product expansion and opportunistic expansions.
Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and met in two, with the average beat being 1.29%.
While the Zacks Consensus Estimate for earnings indicates a marginal decline on a year-over-year basis in 2024, earnings are projected to rebound and grow at the rate of 8.3% in 2025.
Revenue Strength: Driven by diverse revenue streams, loan growth and inorganic expansionary measures, Community Financial’s total revenues witnessed a compound annual growth rate (CAGR) of 2.8% over the last five years (2018-2023). The trend continued in the first half of 2024, driven by higher mortgage banking and employee benefit services revenues. Further, a high interest rate regime is likely to support top-line expansion, while rising funding costs will weigh on it to some extent.
The Zacks Consensus Estimate for revenues indicates 13% and 6.6% growth on a year-over-year basis in 2024 and 2025, respectively.
Strategic Acquisitions: Community Financial has been engaged in opportunistic acquisitions to expand its footprint and gain market share. In 2023, the company acquired certain assets of financial services companies, which provided insurance, wealth management and benefit plan recordkeeping services. Additionally, in March 2023, the company acquired certain assets of Axiom Realty Group, while in May 2022, CBU completed its merger with Elmira Savings Bank. These acquisitions have deepened the company’s presence within the United States and helped expand fee income sources.
Strong Balance Sheet: As of Jun 30, 2024, CBU’s total cash and cash equivalents were $201.5 million. Other borrowings were $716.7 million. Hence, a solid liquidity position allows the company to address its near-term obligations.
Impressive Dividends: Community Financial’s dividend payouts are encouraging. The company has been paying dividends regularly, with the most recent one announced in July 2024. It signified a 2.2% hike from the prior payout to 46 cents per share. Further, the company has hiked its dividend six times during the last five years. The five-year annualized dividend growth is 2.3%, with a 54% dividend payout ratio.
Given its decent earnings strength and strong liquidity position, the company is expected to continue dividend distribution, thus enhancing shareholder value.
The Zacks Consensus Estimate for COFS’s current-year earnings has moved 1.3% north over the past 60 days. Shares of the company have gained 4.7% in the past six months.
The Zacks Consensus Estimate for LC’s 2024 earnings has moved 40.7% upward in the past two months. Over the past six months, shares of the company have gained 18.1%.
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Here's Why Community Financial (CBU) Stock is a Must Buy Now
Community Financial System, Inc. (CBU - Free Report) is well-positioned for growth driven by decent loan growth, high interest rates and strategic acquisitions. Moreover, solid liquidity and product expansion efforts support its financials.
Over the past 30 days, the Zacks Consensus Estimate for 2024 and 2025 earnings has moved 4% and 5.2% north, respectively. CBU currently sports a Zacks Rank #1 (Strong Buy).
Over the past year, shares of Community Financial have gained 9.2%.
Community Financial System, Inc. Price
Community Financial System, Inc. price | Community Financial System, Inc. Quote
Let’s dig deeper into the factors that make CBU stock worth buying now.
Earnings Growth: Community Financial witnessed earnings growth of 1.1% over the past three to five years. This was largely driven by the company’s organic growth strategy, product expansion and opportunistic expansions.
Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and met in two, with the average beat being 1.29%.
While the Zacks Consensus Estimate for earnings indicates a marginal decline on a year-over-year basis in 2024, earnings are projected to rebound and grow at the rate of 8.3% in 2025.
Revenue Strength: Driven by diverse revenue streams, loan growth and inorganic expansionary measures, Community Financial’s total revenues witnessed a compound annual growth rate (CAGR) of 2.8% over the last five years (2018-2023). The trend continued in the first half of 2024, driven by higher mortgage banking and employee benefit services revenues. Further, a high interest rate regime is likely to support top-line expansion, while rising funding costs will weigh on it to some extent.
The Zacks Consensus Estimate for revenues indicates 13% and 6.6% growth on a year-over-year basis in 2024 and 2025, respectively.
Strategic Acquisitions: Community Financial has been engaged in opportunistic acquisitions to expand its footprint and gain market share. In 2023, the company acquired certain assets of financial services companies, which provided insurance, wealth management and benefit plan recordkeeping services. Additionally, in March 2023, the company acquired certain assets of Axiom Realty Group, while in May 2022, CBU completed its merger with Elmira Savings Bank. These acquisitions have deepened the company’s presence within the United States and helped expand fee income sources.
Strong Balance Sheet: As of Jun 30, 2024, CBU’s total cash and cash equivalents were $201.5 million. Other borrowings were $716.7 million. Hence, a solid liquidity position allows the company to address its near-term obligations.
Impressive Dividends: Community Financial’s dividend payouts are encouraging. The company has been paying dividends regularly, with the most recent one announced in July 2024. It signified a 2.2% hike from the prior payout to 46 cents per share. Further, the company has hiked its dividend six times during the last five years. The five-year annualized dividend growth is 2.3%, with a 54% dividend payout ratio.
Given its decent earnings strength and strong liquidity position, the company is expected to continue dividend distribution, thus enhancing shareholder value.
Other Financial Services Stocks to Consider
Some other top-ranked stocks from the finance space worth a look are ChoiceOne Financial Services, Inc. (COFS - Free Report) and LendingClub Corporation (LC - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for COFS’s current-year earnings has moved 1.3% north over the past 60 days. Shares of the company have gained 4.7% in the past six months.
The Zacks Consensus Estimate for LC’s 2024 earnings has moved 40.7% upward in the past two months. Over the past six months, shares of the company have gained 18.1%.