Given the melt-up in bank stocks, I think it's wise to be skeptical if not downright suspicious when a bank screens as undervalued. In the case of Wells Fargo (NYSE:WFC), for instance, there's the bank's well-publicized fraudulent account issue to explain the discount, and in a few cases here and there investors can find smaller banks trading at a discount in large part because they're below the radar screen of most analysts and investors.
To be sure, my growth expectations for Pacific Premier Bancorp (NASDAQ:PPBI) aren't conservative, but I do believe the bank could double its adjusted earnings between 2017 and 2020/2021 and double them again over the ensuing five years. I like this bank's leverage to "prudently aggressive" lending and its stated desire to deploy surplus capital into M&A to further grow the business. While the shares are expensive on a tangible book basis (at least on the basis of what has normally been reasonable for the bank's ROTCE), there could be upside into the $40's as this bank's lending continues to outgrow its peers and it continues to improve its deposit base.
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Pacific Premier Bancorp Seems To Be Living Up To Its Name