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On Tuesday, Piper Sandler analyst Stephen Scouten upgraded shares of FB Financial (NYSE: NYSE:FBK), shifting the rating from Neutral to Overweight and maintaining a price target of $58.00. The upgrade comes amid a notable decline in the company’s stock price, which has fallen approximately 13.4% since the beginning of the year and around 18% since February 6th. According to InvestingPro data, the stock’s RSI suggests oversold territory, while four analysts have revised their earnings estimates upward for the upcoming period.
Scouten highlighted that the current lower stock price offers an appealing opportunity for investors to engage with a robust and growing entity. He pointed out that FB Financial is likely to see low-double-digit growth in the near future. The optimism is partly based on the company’s strategic initiatives, including targeted hiring, geographic expansion, and a more assertive approach to mergers and acquisitions. The company, with a market capitalization of $2.08 billion, has demonstrated its commitment to shareholder returns by raising its dividend for seven consecutive years.
The analyst also emphasized the solid state of the company’s credit, noting a 1.58% loan loss reserve (LLR) and minimal net charge-offs (NCOs). These factors contribute to the strength and stability of FB Financial’s financial position.
Additionally, Scouten mentioned improvements in operational efficiency as a key factor reinforcing the investment case for FB Financial. The core efficiency ratio has shown a significant year-over-year improvement of approximately 750 basis points.
The price target of $58.00 set by Piper Sandler is based on a valuation that is roughly 13 times the firm’s projected 2026 earnings, plus additional credit for excess capital. Scouten justifies this target with the expectation of a 1.4% return on assets (ROA) and an approximately 11% return on equity (ROE) for FB Financial. These metrics suggest a positive outlook for the company’s financial performance in the coming years. InvestingPro analysis indicates the stock is currently undervalued, with comprehensive financial health metrics and detailed valuation analysis available in the Pro Research Report, which covers over 1,400 US stocks.
In other recent news, FB Financial Corporation reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share reaching $0.85, surpassing the consensus estimate of $0.84. However, the company’s revenue for the quarter was slightly below expectations, coming in at $130.38 million compared to the anticipated $131.14 million. Net interest income saw an increase, rising to $108.4 million from $106 million in the previous quarter. The company also reported a net interest margin of 3.50%, a slight decrease from 3.55% in the third quarter. Additionally, FB Financial experienced growth in total loans, which increased by 5.22% annualized to $9.60 billion, and total deposits, which rose by 8.49% annualized to $11.21 billion.
In a separate development, FB Financial announced a 12% increase in its quarterly dividend, raising it to $0.19 per share. The dividend will be paid on February 25, 2025, to shareholders on record as of February 11, 2025. Christopher T. Holmes, President and CEO, highlighted the dividend increase as a testament to the company’s financial health and commitment to shareholder value. These recent developments reflect FB Financial’s ongoing strategy to maintain profitability and growth.
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