This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Buy-Rated Bank Stock Takeout Targets From KBW

4. Oritani Financial


Shares of Oritani Financial (ORIT - Get Report) of the Township of Washington, N.J., closed at $14.60 Friday, returning 22% year-to-date, following an 8% return during 2011.

The shares trade for 1.3 times their Sept. 30 tangible book value of $11.41, according to Thomson Reuters Bank Insight, and for 17 times the consensus Fiscal 2013 EPS estimate of 84 cents. The consensus Fiscal 2014 EPS estimate is 86 cents.

Based on quarterly payout of 15 cents, the shares have a divided yield of 4.11%.

Oritani Financial had $2.8 billion in total assets as of Sept. 30.

The company on Nov. 20 announced a 40-cent special dividend to shareholders of record as of Nov. 30, payable on Dec. 14.

Many companies are paying special dividends or even moving up the payment dates of their fourth-quarter dividends, in anticipation of the possible expiration of the 15% federal income tax rate limitation on qualified dividend income. Under the current rules, if an investor's adjusted gross income keeps him or her under in the 15% tax bracket, the investor actually pays no federal taxes on the dividend income, so nearly all investors could see a massive new haircut to their dividend income, unless President Obama and leaders of Congress come up with a compromise to avert the Fiscal Cliff.

Oritani CEO Kevin Lynch said that "the likelihood of increased tax rates on dividends in 2013 makes a special dividend at this time particularly appealing," and that "the amount of the special dividend is loosely based on the difference between our earnings per share and our dividends per share since we completed our second step transaction" to full stock ownership in June 2010. Following second-step conversions, thrifts are generally unable to agree to a takeout deal for three years.

Oritani's fiscal year ends on June 30. Following the special dividend announcement, KBW analyst Brian Kleinhanzl wrote in a research report that "the special dividend, when added to our existing capital return assumptions, equals 150% of our 2013 earnings estimate. That is certainly a hefty payout ratio, however, the company was very solidly capitalized, reporting a ratio of Tier 1 capital to average assets of 19.0%, as of Sept. 30.

The company reported that it had repurchased 11,159,700 since June 2011 through Sept. 30, at an average price of $13.00. Oritani had roughly 1.8 million remaining in authorized shares for repurchase, as of Sept. 30.

The company has had, by far, the strongest earnings among the five names from KBW's Consolidation List discussed here, with an operating return on average assets (ROA) of 1.24% for the 12-month period ended Sept. 30, according to Thomson Reuters Bank Insight, however, Oritani's return on average tangible common equity for the same period was a relatively low 6.81%, reflecting the excess capital.

Kleinhanzl said on Oct. 25 after Oritani reported its fiscal second-quarter results that the company had continued to achieve "strong loan growth," and that "ORIT should be a core holding for investors seeking growth plus capital returns through dividends and buybacks." The analyst's price target for the shares is $17.00, and estimates the company will earn 84 cents for fiscal 2013, followed by EPS of 88 cents in fiscal 2014.

ORIT Chart ORIT data by YCharts

Interested in more on Oritani Financial? See TheStreet Ratings' report card for this stock.
5 of 8

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
OABC $26.17 1.20%
BPFH $11.79 0.00%
BSRR $16.85 0.00%
ORIT $14.96 0.00%
WFC $53.54 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs