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On Tuesday, Raymond (NSE:RYMD) James maintained a Market Perform rating on Guaranty Bancshares, Inc. (NYSE: NYSE:GNTY), following the company's fourth-quarter results, which surpassed analyst expectations. The financial institution, currently trading near its 52-week high at $37.44 and valued at $447 million by market capitalization, has seen its performance lead to an upward revision in earnings per share (EPS) estimates due to several positive factors. According to InvestingPro analysis, the stock appears slightly overvalued at current levels.
Guaranty Bancshares reported a significant net interest margin (NIM) expansion of 21 basis points, reaching 3.54%. This increase, along with robust average earning assets (AEA) growth, contributed to a rise in net interest income. The company, which boasts a solid dividend yield of 2.72% and has raised its dividend for eight consecutive years according to InvestingPro, also experienced stronger-than-anticipated core fee income and managed to keep core noninterest expenses below both the analyst's predictions and the consensus.
Credit metrics for Guaranty Bancshares remained favorable, resulting in a fourth consecutive negative loan loss provision. The company also saw deposit growth surpass forecasts, investment banking costs decline, and improvements in core efficiency and profitability. However, there were areas that did not meet expectations. Loan contraction was noted for the seventh time in the past eight quarters, although the decline was less severe than anticipated.
Additionally, the noninterest-bearing (NIB) deposit mix decreased slightly, capital ratios fell modestly as no shares were repurchased in the fourth quarter, and tangible book value (TBV) saw a slight contraction to $24.96.
Despite these mixed results, Raymond James analysts have raised their EPS estimates for Guaranty Bancshares due to a higher NIM and lower credit costs than previously modeled. The company maintains a reasonable P/E ratio of 14.7x and has demonstrated consistent profitability with a trailing twelve-month EPS of $2.38.
The firm's perspective is that the risks and rewards are balanced at this point, considering the stock's performance on the day and what is viewed as fair valuation when weighed against the company's potential attractiveness for acquisition. For a deeper understanding of GNTY's valuation and growth prospects, investors can access comprehensive analysis and additional insights through InvestingPro's detailed research reports.
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