On Tuesday, Sierra Bancorp (NASDAQ:BSRR) experienced a revision in its price target, which was lowered to $25 from the previous $27, while the firm's stock rating remained at Buy.
The adjustment follows the bank's report of its first quarter earnings for 2024, which indicated robust loan growth, attributed to the success of its mortgage warehouse strategy that led to increased balances quarter over quarter.
Despite the positive loan growth, Sierra Bancorp reported lower than anticipated earnings per share (EPS), primarily due to heightened expenses. The reported GAAP and core EPS were $0.64 and $0.59, respectively. Core results were adjusted to exclude a $2.8 million loss from the sale of securities and a $3.8 million gain from the sale of fixed assets as part of a sale/leaseback transaction.
The core EPS fell short of expectations by $0.08, a discrepancy mainly driven by a rise in expenses amounting to $0.07 per share, a decrease in net interest income (NII) by $0.01 per share, and an increased provision by $0.01 per share, which were slightly offset by a $0.01 per share increase in fee income.
The pre-provision net revenue (PPNR) per share stood at $0.85, which was below the anticipated $0.95, but showed an improvement from the $0.80 reported in the fourth quarter of the previous year.
Despite the shortfall in core EPS and adjustments to the price target, the outlook for Sierra Bancorp remains positive with the expectation that the bank will be among the few to see core EPS growth in 2024. The maintained Buy rating reflects the firm's confidence in the bank's performance moving forward.
InvestingPro Insights
Following Sierra Bancorp's (NASDAQ:BSRR) latest earnings report, insights from InvestingPro provide a deeper context into the bank's financial health and market position. With a market capitalization of $272.78 million, Sierra Bancorp is trading at a price-to-earnings (P/E) ratio of 8.06, which is relatively low considering the industry average. This could indicate that the stock is undervalued, especially when noting that the adjusted P/E ratio for the last twelve months as of Q4 2023 stands at 7.79.
InvestingPro Tips also shed light on some challenges and strengths for Sierra Bancorp. Analysts have revised their earnings downwards for the upcoming period, reflecting concerns over the bank's near-term profitability. Moreover, the bank's trading at a high P/E ratio relative to near-term earnings growth suggests that investors are expecting lower earnings growth compared to the market valuation. Conversely, Sierra Bancorp's commitment to shareholder returns is evident, having maintained dividend payments for 29 consecutive years, with a notable dividend yield of 4.86% as of the latest data.
For readers looking to delve deeper into Sierra Bancorp's financials and future prospects, InvestingPro offers additional insights. There are more InvestingPro Tips available which can provide a comprehensive analysis to investors. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of analytical tools and expert opinions.
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