This week’s Stock of the Week is a small and stable company that is cautiously growing.
Home BancShares, Inc. (HOMB) operates Centennial Bank, a small and tightly focused regional bank with almost all its locations in Arkansas (77 branches) and Florida (76 branches).
Conservatively managed, with close attention to capital reserves, the company has made good strategic acquisitions over the last decade—since the financial crisis—to expand its footprint. This has brought it FDIC-assisted takeovers of failing institutions and has resulted in five branches in Alabama and one in New York City. Management retains its opportunistic view of acquisitions while focusing everyday operations on customer service and a carefully managed loan portfolio that includes lending to businesses, real estate developers, construction firms and agricultural companies as well as consumers.
The recent devastation caused in parts of Florida by Hurricane Michael may result in a boost in bank business as individuals and companies rebuild. This would be in addition to growth associated with rising interest rates—which help banks by increasing the spread between what they can charge for loans and what they must pay to bring in deposits. Revenue was $552 million last year and is likely to be $677.6 million this year and $720.3 million in 2019. The dividend of $0.48/share/yr. recently yielded 2.4% and appears secure.
Fiscal year: December. Earnings per share: 2019 est./$1.86…2018 est./$1.77…2017/$1.35.
Tim Kang is senior vice president and senior research analyst at Olstein Capital Management, Purchase, New York, where he chooses stocks for the $640 million Olstein All Cap Value Fund (OFALX) and $96 million Olstein Strategic Opportunities Fund (OFSAX). OlsteinFunds.com