Tuesday, Keefe, Bruyette & Woods revised its price target for Territorial Bancorp (NASDAQ:TBNK), reducing it to $9.66 from the previous $10.00. The firm has maintained a Market Perform rating on the stock. This adjustment follows the announcement by Territorial Bancorp of a quarterly dividend of $0.01 per share, which is a significant decrease from the previous $0.05 per share.
The dividend cut represents an 80% reduction from the prior dividend amount. Despite this reduction, the new dividend is still above the expectations set by the firm's recently published model, which had anticipated the dividend to be suspended entirely starting this quarter.
The analyst from Keefe, Bruyette & Woods noted that eliminating the dividend completely could have triggered certain income-oriented funds to sell their shares. By continuing to pay a nominal dividend, Territorial Bancorp may alleviate some potential selling pressure. This decision comes at a time when the company's sale to HOPE is still in process.
Territorial Bancorp's decision to maintain a small dividend payout, despite the significant cut, is seen as a strategic move to avoid potential negative market reactions while the company is undergoing a sale. The firm's commentary suggests that this approach might help in stabilizing the stock's performance in the short term.
InvestingPro Insights
As investors digest the latest news from Territorial Bancorp, including the dividend cut and the ongoing sale to HOPE, it's valuable to consider the current financial metrics and market sentiment. According to real-time data from InvestingPro, Territorial Bancorp has a market cap of $72.22M and is trading at a low Price / Book multiple of 0.29, which might indicate the stock is undervalued. The P/E ratio is at 14.49, reflecting a market sentiment that aligns with the company's earnings.
InvestingPro Tips highlight that management has been actively buying back shares, which could be a sign of internal confidence in the company's value. Additionally, Territorial Bancorp has maintained dividend payments for 15 consecutive years, which speaks to a long-term commitment to returning value to shareholders, despite the recent cut. It's also worth noting that analysts predict the company will be profitable this year, and it has shown a strong return over the last month with a 16.85% price total return.
For those looking for deeper insights and more InvestingPro Tips, visiting the Territorial Bancorp page on InvestingPro can provide a comprehensive analysis. Currently, there are additional tips available, offering a broader perspective on the company's financial health and market position. Investors interested in a thorough analysis can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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