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5 Reasons to Add German American (GABC) Stock to Your Portfolio
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It seems to be a wise idea to add the German American Bancorp, Inc. (GABC - Free Report) stock to your portfolio now. Supported by the rise in loan balances, the company has grown organically over the past few years. Also, its inorganic expansion initiatives are impressive and are expected to aid the top line.
Analysts seem optimistic regarding the company’s earnings growth prospects. Over the past 30 days, the Zacks Consensus Estimate for GABC’s current-year earnings has been revised 8% upward. Thus, the stock currently sports a Zacks Rank #1 (Strong Buy).
Looking at its price performance, GABC shares have gained 20.6% over the past six months compared with the industry’s rally of 14.3%.
Image Source: Zacks Investment Research
A few factors mentioned below make German American an attractive investment option now.
Earnings Strength: The company recorded earnings growth of 7.5% over the last three to five years. While earnings are projected to decline 7.2% this year, the trend will reverse post that. In 2025, the company’s earnings are projected to grow 10.8%.
GABC has an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in three and matched in one of the trailing four quarters, with an average beat of 7.4%.
Revenue Growth: Supported by growth in loan balances, GABC’s revenues have witnessed a compound annual growth rate (CAGR) of 10.6% over the last five years (2018-2023). While the company’s revenues are expected to decline 1.1% in 2024 amid the tough operating backdrop, the metric is projected to rise 33.8% in 2025.
Robust Inorganic Growth Strategies: German American’s capital strength has been helping it to grow inorganically. In July 2024, the company announced an agreement to merge with Heartland BancCorp, a deal that is consistent with GABC’s strategy to enhance scale and diversify its footprint by expanding into Columbus, OH, and Greater Cincinnati.
In January 2022, GABC completed the acquisition of Citizens Union Bancorp of Shelbyville, Inc. and in 2019, it acquired Citizens First Corporation. In 2018, GABC acquired First Security and its subsidiary, First Security Bank, which has been accretive to its earnings.
German American expects to continue to evaluate opportunities to expand business through the opening of new banking, insurance or trust, brokerage and financial planning offices, and acquisitions of other banks.
Strong Leverage: The company currently has a debt/equity ratio of 0.24, which is slightly below the industry average of 0.27. The relatively strong financial health of the company is likely to help it perform better than its peers in a dynamic business environment.
Superior Return on Equity (ROE): GABC has an ROE of 12.97%, higher than the industry average of 10.94%. This shows that the company reinvests its cash more efficiently than its peers.
Sierra Bancorp’s current-year earnings estimates have been revised 12.7% upward over the past 60 days. BSRR shares have gained 51.7% over the past six months.
The consensus estimate for Northrim’s current-year earnings has been revised 4.7% upward over the past 60 days. Over the past six months, NRIM’s share price has increased 27.8%.
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5 Reasons to Add German American (GABC) Stock to Your Portfolio
It seems to be a wise idea to add the German American Bancorp, Inc. (GABC - Free Report) stock to your portfolio now. Supported by the rise in loan balances, the company has grown organically over the past few years. Also, its inorganic expansion initiatives are impressive and are expected to aid the top line.
Analysts seem optimistic regarding the company’s earnings growth prospects. Over the past 30 days, the Zacks Consensus Estimate for GABC’s current-year earnings has been revised 8% upward. Thus, the stock currently sports a Zacks Rank #1 (Strong Buy).
Looking at its price performance, GABC shares have gained 20.6% over the past six months compared with the industry’s rally of 14.3%.
Image Source: Zacks Investment Research
A few factors mentioned below make German American an attractive investment option now.
Earnings Strength: The company recorded earnings growth of 7.5% over the last three to five years. While earnings are projected to decline 7.2% this year, the trend will reverse post that. In 2025, the company’s earnings are projected to grow 10.8%.
GABC has an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in three and matched in one of the trailing four quarters, with an average beat of 7.4%.
Revenue Growth: Supported by growth in loan balances, GABC’s revenues have witnessed a compound annual growth rate (CAGR) of 10.6% over the last five years (2018-2023). While the company’s revenues are expected to decline 1.1% in 2024 amid the tough operating backdrop, the metric is projected to rise 33.8% in 2025.
Robust Inorganic Growth Strategies: German American’s capital strength has been helping it to grow inorganically. In July 2024, the company announced an agreement to merge with Heartland BancCorp, a deal that is consistent with GABC’s strategy to enhance scale and diversify its footprint by expanding into Columbus, OH, and Greater Cincinnati.
In January 2022, GABC completed the acquisition of Citizens Union Bancorp of Shelbyville, Inc. and in 2019, it acquired Citizens First Corporation. In 2018, GABC acquired First Security and its subsidiary, First Security Bank, which has been accretive to its earnings.
German American expects to continue to evaluate opportunities to expand business through the opening of new banking, insurance or trust, brokerage and financial planning offices, and acquisitions of other banks.
Strong Leverage: The company currently has a debt/equity ratio of 0.24, which is slightly below the industry average of 0.27. The relatively strong financial health of the company is likely to help it perform better than its peers in a dynamic business environment.
Superior Return on Equity (ROE): GABC has an ROE of 12.97%, higher than the industry average of 10.94%. This shows that the company reinvests its cash more efficiently than its peers.
Other Stocks to Consider
A couple of other top-ranked stocks from the finance space are Sierra Bancorp (BSRR - Free Report) and Northrim BanCorp, Inc. (NRIM - Free Report) . BSRR currently sports a Zacks Rank #1 and NRIM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sierra Bancorp’s current-year earnings estimates have been revised 12.7% upward over the past 60 days. BSRR shares have gained 51.7% over the past six months.
The consensus estimate for Northrim’s current-year earnings has been revised 4.7% upward over the past 60 days. Over the past six months, NRIM’s share price has increased 27.8%.