Wintrust Prices Public Offering Of $300M Subordinated Notes

Wintrust Financial Corporation (NYSE:C) has priced a public offering of $300 million aggregate principal amount of subordinated notes. The notes carry an interest rate of 4.85% and are slated to mature in 2029. The offering will close on Jun 6, 2019, subject to customary closing conditions.

The company intends to use proceeds from the offering for general corporate purposes. These include making investments at the holding company level, providing capital to support growth, acquisitions or other business combinations, including FDIC-assisted acquisitions, and reducing or refinancing existing debt.

RBC Capital Markets LLC — a division of Royal Bank of Canada (NYSE:RY) — U.S. Bancorp (NYSE:USB) and Citigroup Global Markets Inc. — a division of Citigroup (NYSE:C) — are acting as joint book-running managers for the purpose. The offering is made under the company’s shelf registration statement.

Factors in Favor of Wintrust

Inorganic Growth Strategies: Wintrust has been expanding inorganically since 2003. In 2019, the company completed the buyout of Rush-Oak Corporation. Prior to this, it had acquired American Enterprise Bank and Chicago Shore Corporation in 2018. We believe that the company’s latest acquisition spree will prove accretive to revenues.

Revenue Strength: Wintrust Financial continues to witness top-line improvement. Since 2014, the company has recorded a consistent rise in its sales, witnessing five-year (ended 2018) compound annual growth rate (CAGR) of nearly 10.4%.

The company’s projected sales growth (F1/F0) of 10.2% (compared with the industry average of about 6.9%) indicates constant upward momentum in revenues

Superior Return on Equity (ROE): Wintrust Financial’s ROE of 11.28% compares favorably with the industry average of 10.70%. This indicates that the company reinvests more efficiently compared to the industry.

Stock Looks Undervalued: Wintrust has P/E and P/CF ratios of 10.23 and 9.36 compared to the industry average of 10.84 and 9.99, respectively. Based on these ratios, the stock seems undervalued. It currently has a Value Score of B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.

Our Take

The public stock offering might support the company's financial flexibility and help meet its financial obligations in an efficient way. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and rewarding higher returns to stockholders at the same time.

Also, the company’s strong balance sheet and liquidity position support its growth. Furthermore, inorganic expansion efforts have so far resulted in improved revenues and rise in market share.

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