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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

4 Community Banks Out-Earning the Big Guys

Stocks in this article: BAC C TRMK OZRK STBZ PRK

4. Trustmark Corp.

Shares of Trustmark Corp. (TRMK) of Jacks, Miss., closed at $24.40 Thursday, returning 1% year-to-date, following a 2% return during 2011. The company's return on average assets for 2011 was 1.11%.

Based on a quarterly payout of 23 cents, the shares have a dividend yield 3.77%.

The shares trade for 1.8 times tangible book value, according to HighlineFI, and for 15 times the consensus 2013 EPS estimate of $1.66. The consensus 2012 EPS estimate is $1.60.

The company had $9.7 billion in total assets as of Dec. 30. Trustmark on March 16 completed its acquisition of Bay Bank & Trust of Panama City, Fla., for roughly $22 million in cash and stock, brining on seven branches, with $117 million in loans and $207 million in deposits.

Trustmark is scheduled to report its first-quarter results on April 24, with a consensus analyst estimate of 39 cents, increasing from 38 cents in the fourth quarter, and 37 cents during the first quarter of 2011.

Our of nine analysts covering Trustmark, even have neutral rating, while two rate the shares "Underperform," or sell. Considering that most analysts have 12-month outlooks for their recommendations and price targets, it's not surprising that a quality name like Trustmark, trading at rather high multiples, would have some analysts recommending that investors steer clear.

JPMorgan analyst Steven Alexopoulos last Wednesday reiterated his "Underweight" rating on Trustmark, with a $12 price target, saying the company "ended the final quarter of 2011 on a mixed note, with a mixture of both positive and negative indicators pointing in no clear direction for 2012," and that "although progress was made on the credit front," there was "still ample wood to chop, including a nonperforming assets ratio that ended 2011 at 3.8%."

Alexopoulos said that "while downside risk may be abating, given a growth picture that is likely to trail peers and profitability level that is unlikely to exceed the bank's cost of capital for several years, we see fair valuation of BXS shares near tangible book value," implying significant downside for the shares.

Interested in more on Trustmark? See TheStreet Ratings' report card for this stock.

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