A Cleaner Balance Sheet And Good Leverage Should Help Farmers Capital Bank Grow

Although you wouldn’t necessarily know it from the relative performance of other banks in its weight class, Farmers Capital (NASDAQ:FFKT) has taken some meaningful self-improvement steps over the last couple of years. These moves have put the company on a path toward better interest spreads, better efficiency ratios, and better growth prospects, all of which should support higher earnings and returns in the coming years.

The valuation argument isn’t quite as clean as I’d like it to be. The shares do look undervalued on the basis of near-term returns on equity and EPS/EPS growth, not to mention what the shares could fetch in a potential acquisition, but I’d like to see a little more discount relative to my long-term earnings growth expectations. At worst, though, this looks like a decent buy that could reward investors if 2018 results come in a little stronger than expected.

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A Cleaner Balance Sheet And Good Leverage Should Help Farmers Capital Bank Grow