{"id":2464,"date":"2023-10-17T20:04:28","date_gmt":"2023-10-17T20:04:28","guid":{"rendered":"https:\/\/infundpros.com\/news\/home-bancshares-stable-earnings-attractive-valuation-nysehomb\/"},"modified":"2023-10-17T20:04:29","modified_gmt":"2023-10-17T20:04:29","slug":"home-bancshares-stable-earnings-attractive-valuation-nysehomb","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=2464","title":{"rendered":"Home Bancshares: Stable Earnings, Attractive Valuation (NYSE:HOMB)"},"content":{"rendered":"
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Earnings of Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB<\/span>) will most probably remain stable through the end of 2024. Subdued loan growth and slight margin expansion will likely support earnings, while a normal growth in expenses will restrict earnings. Overall, I\u2019m expecting Home Bancshares to report earnings of $2.03 per share for 2023 and $2.04 per share for 2024. The year-end target price suggests a high upside from the current market price. Hence, I\u2019m maintaining a buy rating on Home Bancshares.<\/span><\/p>\n

Loan Trend Likely to be Better in the Second Half Compared to the First Half of the Year<\/h2>\n

Home Bancshares\u2019 performance was quite disappointing during the first half of the year because of material balance sheet shrinkage. Deposits decreased by 5.3% while loans declined by 1.6% during the first half. I\u2019m not expecting a further decline because of a recent turnaround in business activity. Though the manufacturing PMI index is still in the contractionary territory (i.e. below 50), it is now much higher than in previous months. Similarly, the PMI services index is indicating better activity than the second quarter of this year.<\/span><\/p>\n

\"Chart\"
Data by YCharts<\/figcaption><\/figure>\n

Home Bancshares\u2019 loans are concentrated in Arkansas, Florida, Texas, Alabama, and New York. The unemployment rates of Alabama, Arkansas, and New York are currently lower than before, while the unemployment rates of Texas and Florida are higher than before. Therefore, the labor markets are presenting a mixed near-term outlook for economic activity, and consequently loan growth.<\/p>\n

\"Chart\"
Data by YCharts<\/figcaption><\/figure>\n

Considering these factors, I\u2019m expecting the loan portfolio to grow by 0.5% each quarter through the end of 2024. The following table shows my balance sheet estimates.<\/p>\n

<\/span><\/p>\n\n\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n
Financial Position<\/td>\nFY18<\/td>\nFY19<\/td>\nFY20<\/td>\nFY21<\/td>\nFY22<\/td>\nFY23E<\/td>\nFY24E<\/td>\n<\/tr>\n<\/thead>\n
Net Loans<\/td>\n10,963<\/td>\n10,768<\/td>\n10,975<\/td>\n9,599<\/td>\n14,120<\/td>\n14,035<\/td>\n14,317<\/td>\n<\/tr>\n
Growth of Net Loans<\/em><\/td>\n7.3%<\/em><\/td>\n(1.8)%<\/em><\/td>\n1.9%<\/em><\/td>\n(12.5)%<\/em><\/td>\n47.1%<\/em><\/td>\n(0.6)%<\/em><\/td>\n2.0%<\/em><\/td>\n<\/tr>\n
Other Earning Assets<\/td>\n2,462<\/td>\n2,406<\/td>\n3,495<\/td>\n6,650<\/td>\n5,790<\/td>\n5,320<\/td>\n5,427<\/td>\n<\/tr>\n
Deposits<\/td>\n10,900<\/td>\n11,278<\/td>\n12,726<\/td>\n14,261<\/td>\n17,939<\/td>\n17,167<\/td>\n17,513<\/td>\n<\/tr>\n
Borrowings and Sub-Debt<\/td>\n1,985<\/td>\n1,140<\/td>\n939<\/td>\n912<\/td>\n1,222<\/td>\n1,315<\/td>\n1,342<\/td>\n<\/tr>\n
Common equity<\/td>\n2,350<\/td>\n2,512<\/td>\n2,606<\/td>\n2,766<\/td>\n3,526<\/td>\n3,785<\/td>\n4,003<\/td>\n<\/tr>\n
Book Value Per Share ($)<\/td>\n13.5<\/td>\n15.0<\/td>\n15.8<\/td>\n16.8<\/td>\n17.3<\/td>\n18.7<\/td>\n19.7<\/td>\n<\/tr>\n
Tangible BVPS ($)<\/td>\n7.7<\/td>\n9.0<\/td>\n9.7<\/td>\n10.8<\/td>\n10.1<\/td>\n11.5<\/td>\n12.6<\/td>\n<\/tr>\n
Source: SEC Filings, Earnings Releases, Author’s Estimates (In USD million unless otherwise specified)<\/td>\n <\/td>\n<\/tr>\n<\/table>\n

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