As reflected at the current price of $18, what future ConnectOne Bancorp operating performance is the market anticipating? To achieve average annual stock market performance of 9.0% over the next 6 years, ConnectOne Bancorp shares will need to reach $30. Upper quartile performance will require a $35 ConnectOne Bancorp stock price by 2029.
Executive Summary
- Price Target Research identifies ConnectOne Bancorp as having: above average financial strength, average profitability, below average expected growth, and low stability. A big positive influence on ConnectOne Bancorp’s valuation is its superior Growth.
- Very low valuation, above market shareholder returns. Current valuation levels are very low relative to the ConnectOne Bancorp Peer Group. Recent market returns have outperformed the ConnectOne Bancorp Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, ConnectOne Bancorp shares should reach a level of $69 by 2029 — an 28.0% per year total shareholder return. A 2029 stock price of $30 would reflect median performance and a price of $35 would be required to reach upper quartile performance.
- Growth has been ConnectOne Bancorp’s biggest valuation strength. Historical growth has been high relative to the ConnectOne Bancorp Peer Group and forecasted growth is relatively below average. Asset Growth, Revenue Growth, and Equity Growth have been superior. EPS Growth has lagged. ConnectOne Bancorp’s historical income statement growth and balance sheet growth have diverged. Revenue growth has exceeded asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity.
- Profitability is slightly above average. The company has below average cash and will have to work to generate attractive investment opportunities and improve valuation.
- ConnectOne Bancorp’s risk profile is neutral. Overall variability has been above average with above average revenue variability, above average E.P.S. variability, and very high stock price volatility. Financial Strength is only average and earnings’ expectations are only average. The debt/capital ratio has declined.
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