Growth comes with its own set of costs, and Iberiabank (IBKC)
is paying some of those costs today. Not only is the bank seeing
accounting changes to covered loans weigh on reported results, but
overhead expenses tied to the expansion of its branch banking and
fee-generating operations are also taking a toll. On the other hand,
Iberibank's underlying growth prospects in loans, deposits, profits and
so on look considerably better than average over the next few years.
All
told, Iberiabank's stock looks like a mixed bag today. The 1.1x
multiple to book value and 1.5x multiple to tangible book value seem
rather appealing, but that has to be set next to below-average returns
on tangible assets and equity both today and likely for the next couple
of years. Given that today's valuation already seems to factor in an
eventual return to low-teens returns on equity, I would say Iberiabank
is fairly valued today, but a name worth watching should the shares pull
back again.
Please follow this link to continue:
Iberiabank Paying The Price Of Growth
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