Peoples Bancorp Upped to Strong Buy - Analyst Blog

On Mar 11, Zacks Investment Research upgraded Peoples Bancorp Inc. PEBO to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The uptick in the rank of this Ohio-based regional bank was driven by strong estimate revisions due to a number of factors that include a strategic acquisition, strong fourth-quarter 2013 results and a dividend hike. Notably, the company has delivered positive earnings surprises in all four quarters of 2013 with an average beat of 16.1%. Further, the long-term expected EPS growth rate of this stock now stands at 4.0%.

The recent acquisition deal by Peoples Bancorp strengthens its inorganic growth strategy. On Jan 2014, the company inked a cash plus stock deal to acquire Wellston, Ohio-based Midwest Bancshares (MDWE) for $12.6 million. The deal, which is expected to complete in second-quarter 2014, will enhance earnings in 2015 as incremental earnings of 2014 will be offset by non recurring acquisition costs.

On Jan 23, Peoples Bancorp released its fourth-quarter and full-year 2013 results. Earnings per share in the reported quarter came in at 47 cents, outpacing the Zacks Consensus Estimate by 38.2%. Results benefited from top-line growth, partially offset by higher operating expenses.

Further, the company sustained its organic growth strategies as Peoples Bancorp's loan and deposit balances witnessed an improvement.  As of Dec 31, 2013, net loans increased 21.9% year over year to $1.2 billion, while total deposits were up 5.9% to $1.6 billion.

Additionally, on Jan 23, the company announced a 7% hike in its quarterly cash dividend to 15 cents per share. The dividend was paid on Feb 18, to shareholders of record Feb 3.

Over the last 60 days, the Zacks Consensus Estimate for 2014 advanced 3.2% to $1.92 per share, while it declined marginally to $2.06 per share for 2015.

Other Stocks to Consider

Other stocks in this space worth considering include First Financial Corp. THFF and First Merchants Corp. FRME. Both the stocks hold the same Zacks Rank as Peoples Bancorp.