Tuesday, Sierra Bancorp (NASDAQ:BSRR) stock received an upgrade in its rating from Neutral to Buy by Janney, though the firm also reduced the fair value estimate for the company to $23.00 from $24.00.
The adjustment is based on the expectation that Sierra Bancorp will achieve a return on assets exceeding 1%, which is currently not reflected in the stock price that is trading below its tangible book value.
The earnings per share (EPS) estimates for Sierra Bancorp have been modified, with a slight increase to $0.60 for the second quarter of 2024, up $0.02, and to $2.51 for the full year, up $0.08. However, the estimate for 2025 has been decreased by $0.11 to $2.66. The new fair value estimate is set at 9.4 times the forward four-quarter EPS estimate of $2.45 and represents 97% of the forecasted forward tangible book value.
Sierra Bancorp's first-quarter results for 2024 were also disclosed, revealing a reported EPS of $0.64, with core EPS at $0.59. These figures compare to Janney's estimate of $0.54 and the consensus estimate of $0.56.
The reported earnings were bolstered by additional bond sales amounting to approximately $250 million, which were utilized to reduce short-term borrowings and are earmarked for future loan fundings. Furthermore, the company experienced a margin improvement of 31 basis points from the fourth quarter of 2023.
InvestingPro Insights
In light of Sierra Bancorp's recent stock rating upgrade and the subsequent fair value estimate adjustment, keen investors might find the real-time data and InvestingPro Tips particularly insightful. Sierra Bancorp is currently trading at a P/E ratio of 8.06, which is considered high in relation to its near-term earnings growth, suggesting that the stock might be overvalued from an earnings perspective. Additionally, the company's gross profit margins are on the weaker side, yet it has a strong track record of maintaining dividend payments for 29 consecutive years, which could be appealing to income-focused investors. Analysts remain optimistic about the company's profitability, predicting it will remain profitable this year, a trend supported by its performance over the last twelve months.
From a data standpoint, Sierra Bancorp's market capitalization stands at $272.78 million, with a revenue growth of 7.25% over the last twelve months as of Q4 2023. The company's operating income margin is robust at 33.54%, which may indicate efficient management and strong core business operations. For yield-seeking investors, the dividend yield is notably high at 4.86%, especially considering the current market environment. With these metrics in mind, investors can make more informed decisions regarding their interest in Sierra Bancorp.
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