On Tuesday, Keefe, Bruyette & Woods adjusted their outlook on Capital City Bank Group (NASDAQ:CCBG), reducing the stock price target to $37 from the previous $38 while maintaining an Outperform rating. The financial firm's analyst cited a mix of factors influencing the decision, including a slight dip in net interest margin (NIM) and adjustments to earnings estimates for the upcoming years.
Capital City Bank Group's recent performance included a beat on both KBW's and consensus expectations, primarily due to provisions, with pre-provision net revenue (PPNR) aligning with predictions. Despite a 5 basis point drop from the last quarter, the bank's NIM was reported to be well above its peers, up by 4%, with average non-interest bearing deposits (NIBDs) making up 38% of the total.
The company's credit quality remained strong, and its balance sheet showed stability over the quarter. Moreover, Capital City Bank Group repurchased 0.5% of its shares during this period. The buyback activity did not hinder capital growth, as tangible book value per share (TBVPS) rose by 2.3% from the last quarter.
The bank's profitability metrics were robust, achieving a return on assets (ROA) of approximately 1.20% and a return on tangible common equity (ROTCE) of around 14%. Still, the analyst has slightly revised the earnings estimates for 2024 and 2025 to $2.92 and $2.90, respectively, mainly due to a projected decrease in net interest income (NII).
The revised stock price target of $37 reflects the new earnings outlook, with the firm noting that Capital City Bank Group's stock is trading at 9.1 times the estimated earnings for 2025 and 1.3 times the tangible book value.
InvestingPro Insights
Capital City Bank Group's (NASDAQ:CCBG) commitment to shareholder value is evident through its consistent dividend payments, having maintained them for 11 consecutive years, and even raising them for the past decade.
This is a testament to the company's financial discipline and long-term strategy, which may be particularly attractive to income-focused investors. The current dividend yield stands at a notable 3.1%, paired with a dividend growth of 23.53% over the last twelve months as of Q1 2024.
From a valuation perspective, CCBG's stock is trading at a low P/E ratio of 9, which is close to the adjusted P/E ratio of 8.99, indicating a potentially undervalued status relative to near-term earnings growth. The PEG ratio, which measures the stock's price relative to its earnings growth rate, is also low at 0.16, suggesting that the company's earnings growth could be undervalued by the market.
While analysts have revised their earnings downwards for the upcoming period, the InvestingPro platform reveals additional insights that could help investors make a more informed decision, including the fact that analysts predict the company will be profitable this year, having been profitable over the last twelve months.
To explore more in-depth analysis and gain access to exclusive metrics, consider using InvestingPro. Remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are over 6 additional InvestingPro Tips available for Capital City Bank Group at https://www.investing.com/pro/CCBG, which could provide further guidance on the company's financial health and investment potential.
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