The firm said it raised its rating on the financial holding company as Old National is moving its focus to organic growth and operating leverage.
Sterne Agee set a $16.25 price target on Old National stock.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Shares of Old National are higher by 1.43% to $13.44 at the start of trading this morning.
"We rate OLD NATIONAL BANCORP (ONB) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite the weak revenue results, ONB has outperformed against the industry average of 12.8%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The gross profit margin for OLD NATIONAL BANCORP is currently very high, coming in at 96.40%. Regardless of ONB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.53% trails the industry average.
- OLD NATIONAL BANCORP's earnings per share declined by 35.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OLD NATIONAL BANCORP increased its bottom line by earning $1.00 versus $0.95 in the prior year. For the next year, the market is expecting a contraction of 5.0% in earnings ($0.95 versus $1.00).
- Net operating cash flow has significantly decreased to $16.00 million or 61.65% when compared to the same quarter last year. Despite a decrease in cash flow OLD NATIONAL BANCORP is still fairing well by exceeding its industry average cash flow growth rate of -97.39%.
- In its most recent trading session, ONB has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
- You can view the full analysis from the report here: ONB Ratings Report