Interactive Brokers shares jump as it secures spot in S&P 500
On Monday, Stephens, a financial services firm, upgraded Dime Community Bancshares, Inc. (NASDAQ:DCOM) stock from Equal Weight to Overweight, setting a new price target of $39.00, up from the previous $30.00. The adjustment follows Dime Community Bancshares' recent equity raise of $144 million last week.
The analyst at Stephens revised the operating earnings per share (EPS) estimates for the years 2024, 2025, and 2026. The updated forecasts are an increase of 2%, 9%, and 1%, resulting in estimated EPS of $1.51, $2.50, and $4.12, respectively. The new price target of $39.00 represents a multiple of 9.5 times the projected 2026 EPS and approximately 155% of the projected tangible book value (P/TBV).
The upgrade comes in the wake of the company's plans for restructuring its securities and bank-owned life insurance (BOLI). Analysts anticipate these changes will yield dual benefits: an improved return on assets (ROA) of around 1.20% by 2026, up from the previous estimate of 1.07%, and a significant reduction in the commercial real estate (CRE) concentration ratio, which is expected to decrease by about 40-45 percentage points to between 455% and 460%.
Additionally, the analyst expressed optimism about Dime Community Bancshares' recent hiring initiatives following the collapse of Signature Bank New York (OTC:SBNY) and the bank's deposit profile, which includes roughly 30% non-interest bearing deposits. The bank is also expected to experience solid net interest margin (NIM) expansion.
Given these factors, and with the shares trading at approximately 8 times the projected 2026 EPS and around 135% P/TBV, the analyst believes that Dime Community Bancshares' stock is currently undervalued.
In other recent news, Dime Community Bancshares, Inc. has announced a public offering of its common stock at $32.00 per share, aiming to raise an estimated $125 million. The net proceeds are set to be used for general corporate purposes to support the company's continued organic growth. The company has also exhibited significant growth in the third quarter, with a notable rise in net interest margin, core deposits, and business loans.
Despite an increase in non-interest expenses and loan loss provisions, Dime Community Bancshares remains optimistic about its future performance. The bank also plans to reduce the multifamily loan percentage from 37% to between 25% and 30% over time.
In addition, Dime Community Bancshares has made significant amendments to its corporate governance structure, changing how directors are elected during uncontested and contested elections. This change is part of the company's ongoing efforts to align its corporate governance with best practices.
InvestingPro Insights
Recent data from InvestingPro adds weight to Stephens' optimistic outlook on Dime Community Bancshares (NASDAQ:DCOM). The company's market capitalization stands at $1.47 billion, with a P/E ratio of 22.48, suggesting investors are willing to pay a premium for its earnings. This valuation aligns with the analyst's view that the stock may be undervalued, especially considering the projected growth.
InvestingPro Tips highlight that DCOM has maintained dividend payments for 28 consecutive years, demonstrating a commitment to shareholder returns that could attract income-focused investors. The current dividend yield is 2.97%, which may provide a steady income stream alongside potential capital appreciation.
Moreover, DCOM has shown strong performance recently, with a 71.71% price total return over the past six months and a 69.04% return over the last year. This robust momentum supports the analyst's decision to upgrade the stock and raise the price target.
It's worth noting that InvestingPro offers 8 additional tips for DCOM, providing a more comprehensive analysis for investors seeking deeper insights into the company's prospects.
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