Monthly Archives: February 2015

Cabela’s: Zacks’ Bear of the Day Play

Cabela’s (CABAnalyst Report) has reported earnings below the Zacks Consensus Estimate in 5 of the last 6 quarters. The last two misses were both bigger than the miss previous to it. That is a bad way of saying things keep getting worse for the company in terms of managing Wall Street’s expectations. CAB is now a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.Company Description

Cabela’s is a specialty retailer and direct marketer of hunting, fishing, camping, and related outdoor merchandise. Cabela’s was founded in 1961 and is headquartered in Sidney, Nebraska.

Only One Beat In A Year and A Half

When a company has a bad history of beating the Zacks Consensus Estimate, investors tend to shun the stock, and over the last year and a half that has been true of a former high flier in CAB.

CAB has beaten the Zacks Consensus Estimate one time on the last year and a half, it was the June 2014 quarter. The company reported $0.61 when the Zacks Consensus Estimate was calling for $0.51. That ten cent beat was a positive earnings surprise of 19% and as a result investors sent the stock higher by more than 2% in the session following the release.

The problem is that the next quarter saw CAB reported a very weak top line, coming in roughly $41M below the Zacks Consensus Estimate. The lower revenues led to a $0.05 miss on the bottom line and investors ran for cover. The stock sank more than 14% in the session following the release.

Earnings Estimates

Estimate revisions drive the Zacks Rank, and the estimate revisions for CAB have been pretty negative over the last year or so. The 2015 Zacks Consensus Estimate was $4.23 in February of last year and held around that level through September when the number ticked lower by three cents. After the poor earnings report highlighted above, the Zacks Consensus Estimate dumped down to $3.54. The estimate ticked lower to $3.51 in January of this year and following the most recent miss, the Zacks Consensus Estimate now stands at $3.15. That is a drop of more than 25%.

The 2015 Zacks Consensus Estimate is still rather fresh, with only a few months of data available. Still, after the most recent earnings miss, the number dropped precipitously from $3.94 to $3.59.

Chart

The price and consensus chart has recently seen the addition of EPS surprises as well. The chat graphs the stock price along with the Zacks Consensus Estimates for the past several years to show how earnings estimates are a primary driver of stock prices. The recent misses and falling estimates have contributed to a falling stock price and investors would be wise to avoid holding or buying this stock until the estimates turn around and head higher.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.

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Tri Pointe Homes: Zacks’ Bull of the Day Play

Tri Pointe Homes (TPHSnapshot Report) is a Zacks Rank #1 (Strong Buy), and as such, we know that earnings estimates are moving higher. There are some macro events that are driving up estimates as well strong recent numbers from another home builder. Today, TPH is the Bull of the Day.Macro Tailwind

Interest rates have remained low for some time now. More recently the market is looking to the Fed to see when they will move interest rates higher. Recent reports suggest an extremely low likelihood of a rate increase in June and only a slightly higher chance for the September meeting.

The low interest rate environment has been a strong tailwind for the home building industry. The cheap money has allowed consumers to obtain the “American Dream” for some time, but with signals of the potential rate increases might push even more home buyers into the market to lock in lower rates.

Company Description

Tri Pointe Homes designs, constructs, and sells single-family homes. The company also acquires and develops land. It operates a portfolio of six brands across eight states, including Maracay Homes in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California and Colorado, and Winchester homes in Maryland and Virginia. The company is based in Irvine, California. TPH operates as a subsidiary of Weyerhaeuser NR Company.

Earnings History

TPH has a very strong earnings history, topping the Zacks Consensus Estimate for all seven reports the company has made. That streak is on the line on March 3, as the company reports again. If this report is anything like the most recent release, then investors will probably be willing to bet the house on more future success.

The most recent quarter was reported back in November of 2014. The company posted EPS of $0.22, topping the Zacks Consensus Estimate by $0.20 for a 1000% positive earnings surprise. The company also posted a very strong surprise on the top line as well, coming in with $478M in revenues, roughly $34M ahead of the Zacks Consensus Estimate.

Estimates

The 2014 Zacks Consensus Estimate, which will be closed out with the earnings report next week has been moving higher over the last several months. Back in August of 2014, the Zacks Consensus Estimate was sitting at $0.33, but then moved higher to $0.47 in November and has crept higher to $0.55.

The 2015 number is another story. In August of 2014, the number was $1.29 and following the report in November the estimate dropped down to $1.27, which is where it remains right now.

Valuation

TPH has a great valuation for a growth company. A trailing PE of 17.7x is just slightly higher than the 15.7x industry average, but more importantly the forward PE of 12.5x is below that of the 13.1x industry average. The price to book of 1.8x is also showing the stock trading at a discount to 1.9x industry average. Price to sales is a little skewed here and has TPH at 5.2x while the industry typically trades around 1-2x.

To get a better grasp as to why TPH trades at such a low valuation, I can only point to the net margin of 2.9% for TPH and the fact that the industry average is 5.2%. That said TPH is expected to see revenue grow 34%, well ahead of the 23% growth the industry is expecting. Moreover, TPH is slated to see EPS grow 130%, while the rest of the industry is looking at earnings growth of 25%.

Competitor Reports

Amid some mixed macro data for new home starts and new homes sales, we recently saw a very strong report from Toll Brothers. That company produced EPS of $0.44, a $0.14 beat of the Zacks Consensus Estimate. What caught my eye was the strong topline beat of about $80M or 10% ahead of the Zacks Consensus Estimate.

When you look at that report and what other home builders are saying, the prospects of out-performance are strong as long as interest rates continue to remain low.

Revenue Chart

The Zacks Research Wizard software allows me to plot all sorts of metric and estimates vs the stock price. I wanted to show this chart of the forward consensus revenue estimate for TPH plotted against the stock price. Continued growth in revenue is expected and that will likely drive the stock price higher.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.

Watts Water: Zacks’ Bear of the Day Play

Watts Water Technologies (WTSAnalyst Report) recently reported disappointing fourth quarter results in which sales and earnings both came in below the Zacks Consensus Estimates. This prompted a flurry of negative estimate revisions from analysts and sent the stock to a Zacks Rank of 5 (Strong Sell).

Although shares sold off a bit following the Q4 report, the stock does not look cheap at more than 20x forward earnings.

Watts Water Technologies manufactures products to control the efficiency, safety, and quality of water within residential, commercial, and institutional applications. Its main product lines include residential and commercial flow control products, HVAC and gas products, drains and water re-use products, and water quality products.

Fourth Quarter Results

Watts Water Technologies reported disappointing fourth quarter results on February 17. Adjusted earnings per share came in at $0.58, missing the Zacks Consensus Estimate of $0.65. It was a 2% increase over the same quarter last year.

Sales were essentially flat year-over-year at $376.5 million, which also missed the consensus of $379.0 million. Strength in the Americas and Asia-Pacific was offset by declines in Europe, Middle East and Africa (EMEA). Foreign currency effects were a headwind in the quarter as well.

Meanwhile, the adjusted operating margin decreased by 0.2 percentage points to 9.6% of sales.

Estimates Falling

Following the Q4 miss by Watts Water Technologies, analysts revised their estimates significantly lower for both 2015 and 2016. This sent the stock to a Zacks Rank of 5 (Strong Sell). This puts it in the bottom 5% of all stocks that Zacks ranks based on earnings momentum.

The 2015 Zacks Consensus Estimate fell from $3.06 before the report to $2.55. The 2016 consensus declined from $3.58 to $2.96 over the same period.

Premium Valuation

Shares of Watts Water Technologies sold off after the Q4 report, but it still doesn’t like a value here. Shares trade at 21x 12-month forward earnings, a premium to its 10-year median of 16x and the industry median of 20x. And its enterprise value to cash flow ratio of 23 is also well above its historical median of 14 and the industry multiple of 19.

The Bottom Line

With falling earnings estimates and premium valuation, investors should consider avoiding Watts Water Technologies at least until its earnings momentum improves.

Todd Bunton, CFA is a Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor and Surprise Trader services.

Group 1 Auto: Zacks’ Bull of the Day Play

Earnings estimates have been soaring for Group 1 Automotive (GPIAnalyst Report) after the company delivered strong Q4 results on February 5. Both revenues and earnings easily surpassed the Zacks Consensus Estimates due to strength in both new and used vehicle sales, as well as expanding profit margins.

Group 1 is a Zacks Rank #1 (Strong Buy) stock. The valuation picture looks very reasonable too with shares trading at 12x forward earnings and 0.2x sales.

Group 1 Automotive owns and operates 150 automotive dealerships, 195 franchises, and 38 collision centers in the United States, the United Kingdom and Brazil. The company sells new and used cars and light trucks, arranges related vehicle financing, sells service and insurance contracts, provides automotive maintenance and repair services and sells vehicle parts.

In 2014, the company’s revenue was divided as follows:

New Vehicle Sales: 58%
Used Vehicle Sales: 27%
Parts & Service: 11%
Finance, Insurance & Other: 4%

Interestingly, while ‘Parts & Service’ made up just 11% of total revenue last year, it accounted for 41% of total gross profit due to significantly higher margins than in both new and used vehicle sales.

Fourth Quarter Results

Group 1 delivered better-than-expected fourth quarter results on February 5. Adjusted earnings per share came in at $1.67, crushing the Zacks Consensus Estimate of $1.31. It was a 55% increase over the same quarter last year.

Total revenue rose 11% year-over-year to $2.539 billion, beating the consensus of $2.479 billion. New vehicle revenues increased 9.9% on 8.4% higher unit sales. New vehicle gross profit increased 4.4% per unit to $1,973. Retail used vehicle revenues jumped 15.6% due to a 15.1% increase in unit sales. And Parts & Service revenue rose 9.5%.

Overall, the adjusted operating margin improved 60 basis points to 3.5%.

Estimates Rising

Following strong Q4 results, analysts revised their estimates significantly higher for Group 1. This sent the stock to a Zacks Rank #1 (Strong Buy).

The 2015 Zacks Consensus Estimate increased from $6.49 before the report to $6.80. The 2016 consensus increased from $7.09 to $7.58 over the same period.

Group 1 is not the only auto retailer seeing positive estimate revisions these days. In fact, the ‘Retail/Wholesale Auto/Truck’ industry ranks in the top 10 out of 265 industries that Zacks ranks based on earnings momentum.

Other auto retailers like Asbury Auto Group (ABGSnapshot Report), AutoNation (ANAnalyst Report), Lithia Motors (LADAnalyst Report), and Sonic Automotive (SAHSnapshot Report) all sport either a Zacks Rank of 1 (Strong Buy) or 2 (Buy).

One of the reasons for this has been the strong rebound in new car sales from the depths of the Great Recession.

Reasonable Valuation

The valuation picture looks reasonable for Group 1. Shares trade at 12x 12-month forward earnings, a discount to the industry median of 13x. Its price to sales ratio of 0.2 is also below the industry median of 0.3.

The Bottom Line

With favorable industry trends, rising earnings estimates and reasonable valuation, Group 1 Automotive offers investors a lot to like.

Todd Bunton, CFA is a Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor and Surprise Trader services.

Devon Energy: Zacks’ Bear of the Day Play

With continued uncertainty over oil prices, energy stocks can’t seem to catch a break lately. Yes, prices for WTI crude have risen from 52 week lows, but their current level—around the $50/bbl. mark—is still well shy of a good price point for many companies.

Take Devon Energy (DVNAnalyst Report) for example. This Oklahoma-based company is in the volatile exploration and production space with interests in the in-focus shale regions in the middle of the United States.

DVN is much larger (and has remained profitable) when compared to many of its more leveraged or underprepared peers in the space, but it has still seen pain over the past few months. In fact, has seen its share price drop by about 14% in the past six months, though this represents a performance that is well off of the lows for the company’s stock which were seen in December.

Time for Optimism?

Yet while many investors might view the recent positive trading for DVN as a positive, it is best to take a look at some of the fundamentals first. As while DVN might have beaten the S&P 500 over the past month, current and recently updated earnings estimates suggest that DVN’s short-term run might be coming to an end soon.

After all, analysts—those who are arguably the most in the know about the company—haven’t really been believers in the recent DVN rally as they have almost universally been slashing their earnings estimates for DVN lately. For the current and next quarters, we have seen a total of 10 estimates go down in the last seven days compared to zero higher, while for the current and next year time frames, just two estimates have gone higher compared to a total of 13 lower.

Crashing Expectations

And if this analyst agreement wasn’t enough, let’s also consider the magnitude of the estimate revisions. Current quarter estimates have crumbled from 56 cents a share one week ago to just 38 cents a share today. And for the current year, the consensus estimate has fallen from $3.01/share to $2.55/share over the same time frame, in near free fall from the 90 day ago consensus which stood at $5.39/share.

With these figures analysts are now looking for DVN to post an EPS contraction of over 70% for this quarter and close to -50% for the full year too. Things aren’t exactly expected to improve next year either, as that figure looks to be down nearly 30% year-over-year as well.

Thanks to these dramatic declines in expectations, it shouldn’t be too surprising to note that DVN has seen its Zacks Rank fall from a #3 (Hold) down to a #5 (Strong Sell) over the past week. This means that we are looking for underperformance from DVN and suggest that investors consider other choices.

Bottom Line & Other Picks

So while DVN might have been a decent performer lately let’s try to look past this head fake and consider the earnings estimate revision story. Earnings estimates have been crashing in recent days and it isn’t looking good at all for DVN to turn things around in the near term.

We should note that the oil exploration and production segment also has a very low industry rank, bottom 15% overall in fact, so few names have escaped this downturn. However, two companies have been recently upgraded to Zacks Rank #2 (Buy) levels and have seen positive earnings surprises in the last quarter, suggesting investors should look to the duo of Midstates Petroleum (MPOSnapshot Report) or Sabine Oil & Gas (SOGCAnalyst Report) for better exposure in this corner of the market.

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Dave & Buster’s: Zacks’ Bull of the Day Play

The restaurant sector has been on fire lately as lower oil prices and a stronger job market have benefited many companies in this space. The outlook is pretty bright too, as the retail-restaurant sector currently has a Zacks Industry Rank in the top 20% overall.

While there are many ways to play this well-positioned sector, one that you might not have considered is the relatively recent IPO of Dave & Buster’s (PLAYSnapshot Report). The company is pretty unique in the sector thanks to its heavy ‘amusement’ component and it could be a strong outperformer for months to come as well.

PLAY in focus

Dave & Buster’s is a Dallas-based chain that has about 70 stores across the United States. The company combines a traditional sit-down restaurant with an arcade, allowing customers to purchase food and drinks, or play a wide variety of games on a given visit.

These games are really what sets Dave & Buster’s apart from the competition though, and especially from a stock perspective. That is because the game component of the business is a pretty high profit margin one and it gives PLAY a nice boost in revenues too. In fact, the amusement/game side of the business accounts for slightly over half of the total revenues for PLAY showing just how important this segment is to their business model.

Analyst Estimates

Analysts seem to be fans of the company’s approach too, as we have seen some solid earnings estimate revisions as of late. In the past 30 days, we have seen the current quarter estimate go from $0.21/share to $0.30/share, while the current year estimate has gone from 60 cents a share to 69 cents a share in the same time frame.

At this level, PLAY will be pushing past 56% EPS growth year-over-year for the current year, and then 33% for the following year. So while growth levels are expected to taper off, the company is still expected to charge ahead in the restaurant space.

But let’s also note that the company has a very disciplined expansion strategy and that there is basically no way they will face oversaturation issues with their current store growth plan. According to the company website, PLAY is opening just four stores a year, and with less than 75 currently in existence, D&B clearly has plenty of avenues left for growth at its disposal.

Bottom Line

For these reasons and the strong industry trend, it shouldn’t be too much of a surprise that we have given PLAY a Zacks Rank #1 (Strong Buy) and are looking for outperformance ahead.

So if you are seeking a growing name in the restaurant space that does things a little differently, take a closer look at PLAY. The company is expected to post great growth numbers despite a very modest increase in store count, and it may be an overlooked winner in the current restaurant stock boom.

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Cheesecake Factory: Zacks’ Bear of the Day Play

The Cheesecake Factory (CAKEAnalyst Report) recently reported Q4 revenue and earnings well below expectations as comparable restaurant sales increased only 1.4%. Analysts revised their estimates significantly lower for both 2015 and 2016 after the report, sending the stock to a Zacks Rank #5 (Strong Sell).

Despite the weak earnings momentum, shares do not look like a value at more than 20x forward earnings.

The Cheesecake Factory Incorporated operates 189 full-service, casual dining restaurants throughout the U.S. and Puerto Rico. It operates 177 restaurants under The Cheesecake Factory® brand, 11 restaurants under the Grand Lux Cafe® brand, and one restaurant under the RockSugar Pan Asian Kitchen® brand.

Fourth Quarter Results

The Cheesecake Factory reported disappointing fourth quarter results on February 11. Earnings per share came in at $0.48, missing the Zacks Consensus Estimate of $0.60. It was a 16% decrease from adjusted EPS in the same quarter last year.

Revenues rose 5% year-over-year to $499.7 million, which was below the consensus of $510.0 million. Comparable restaurant sales inched up just 1.4%.

Meanwhile, total costs and expenses increased from 90.7% to 93.0% revenues. This was primarily due to higher cost of sales and labor expenses.

Estimates Falling

Following disappointing Q4 results, analysts revised their estimates significantly lower for both 2015 and 2016. This sent the stock to a Zacks Rank #5 (Strong Sell).

The Zacks Consensus Estimate for 2015 is now $2.16, down from $2.42 before the report. The 2016 consensus is currently $2.50, down from $2.82 over the same period.

As you can see in the “Price, Consensus & EPS Surprise” chart, 2015 estimates have been declining for several months now amid disappointing results:

Premium Valuation

Shares of The Cheesecake Factory do not look cheap at 22x 12-month forward earnings. That is well above its 10-year median of 18x. And its enterprise value to cash flow ratio of 13x is also a premium to its historical median of 12x. Cheesecake’s free cash flow yield is just 3.5%.

The Bottom Line

With soft comparable restaurant sales, steadily declining earnings estimates, and lofty valuation, The Cheesecake Factory doesn’t offer investors much to like right now.

Todd Bunton, CFA is a Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor and Surprise Trader services.

Heartland Financial: Zacks’ Bull of the Day Play

Earnings estimates have been rising for Heartland Financial USA (HTLFSnapshot Report) following strong fourth quarter results on January 26. Not only was loan growth solid, the net interest margin was relatively stable despite a difficult rate environment, and credit quality continued to improve.

Heartland is a Zacks Rank #1 (Strong Buy) stock. Additionally, shares look very reasonably priced at just 12x forward earnings and 1.7x tangible book value.

Heartland Financial USA, Inc. is a bank holding company that operates nine independent bank charters and one consumer finance company. It currently has 86 banking locations in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas and Missouri as well as loan production offices in California, Nevada, Wyoming, Idaho, North Dakota, Oregon, Washington and Nebraska.

Fourth Quarter Results

Heartland delivered better-than-expected fourth quarter results on January 26. Earnings per share came in at $0.64, beating the Zacks Consensus Estimate of $0.57. It was a 52% increase over the same quarter last year.

Net interest income jumped 13% year-over-year. The net interest margin declined by two basis points from the prior quarter but was up 12 basis points from Q4 2013. Loan growth was solid at an annualized rate of 8.3%. This was due in part to strength in commercial and commercial real estate loans.

Credit quality continued to improve with non-performing loans declining from 1.21% to 0.63% of total loans. The allowance for loan losses at the end of the year was 1.07% of total loans compared to 1.19% at the end of 2013.

Rising Estimates

Following strong Q4 results, analysts revised their estimates meaningfully higher for both 2015 and 2016. This sent the stock to a Zacks Rank #1 (Strong Buy).

The 2015 Zacks Consensus Estimate is now $2.42, up from $2.28 before the report. The 2016 consensus is currently $2.62, up from $2.46 over the same period.

Attractive Valuation

Shares of Heartland Financial USA are trading near their 52-week high after the strong Q4 report. But the valuation picture still looks reasonable.

The stock trades at just 12x 12-month forward earnings, which is a discount to the Midwest bank median of 14x. And its price to tangible book ratio of 1.7 is below the peer group multiple of 2.4. Heartland generated a 12.0% return on tangible equity in 2014 compared to the peer group median of 12.2%.

The Bottom Line

With improving fundamentals, solid earnings momentum and attractive valuation, Heartland Financial USA offers investors a lot to like.

Todd Bunton, CFA is a Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor and Surprise Trader services.

McDonald’s: Zacks’ Bear of the Day Play

About 25 pounds ago I was a burger-eating son of a gun. I love them. I even have one named after me at a local place here in Chicago, “The Legendary Infamous FBD.” It’s got bleu cheese, grilled onions, bacon and a fried egg on a pretzel bun. Delicious. But that doesn’t mean I don’t enjoy a good run at some fast food. Among the nastiest of vices is the urge to gorge myself on McDonald’s (MCDAnalyst Report) Double Cheeseburgers with extra pickles.

But as I’ve switched up my diet and begun to exercise, I’ve traded in the Golden Arches for much healthier choices. Sort of like how our Bear of the Day just traded in CEO John Thompson for another choice. MCD has struggled to adapt to the changing restaurant space. The push toward organic, fresh food and fast casual has left McDonald’s struggling to maintain market share. They’ve basically become the poster child for all that’s wrong with fast food in America today.

McDonald’s has made several attempts to become relevant again over the last few years but nothing has really taken off. Their McCafe push really didn’t do much to turn any McDonald’s locations into the local coffee hang out. Really all it did was add levels of complexity to an already giant array of menu items. The push for premium salads also fell by the wayside. It seems like ideas just get thrown against the wall like spaghetti to see which ones stick.

Looking at the analyst expectations for MCD, it doesn’t look like they are having too much success. In the last 30 days, sixteen analysts have revised their current year estimates to the downside for the current year, while nine have done so for next year as well. The bearish sentiment on Wall Street has managed to drop consensus for this year down from $5.60 all the way down to $5.03, while next year’s numbers have dropped from $6.06 down to $5.43.

Maybe with Thompson gone, McDonald’s will start to cut their menu down so they can be really good at a few things, help their branding, rather than trying to have something for anyone and doing many things very mediocre. Personally, I’ve invested in McDonald’s and done very well in the stock over the years. However, I’ve avoided it recently as it appears to have an identity crisis.

The stock just can’t seem to get over the $104 level with any sort of conviction. That level was hit and acted as strong resistance not just during 2013, but in 2014 as well. Both years the peak occurred in spring, smack dab in the middle of Q2. Only 2014’s selloff took the stock well beyond the 2013 lows. In December MCD traded down to $87.62. Since then there’s been a bit of a bounce off the bottoms, but the last failure at $96 implies a retest of the 52 week low could be on the horizon. Add that to a commodity channel index moving from 100 towards the 0 line, which means a confirmation of the sell signal could be just around the corner.

Investors looking for an alternative in the strong restaurant industry have several other stocks to choose from. The industry is in the Top 25% of our Zacks Industry Rank. Two stocks to look at are Zacks Rank #1 (Strong Buy) stocks Dave and Buster’s (PLAYSnapshot Report) and Ignite Restaurants (IGR).

Meridian Bancorp: Zacks’ Bull of the Day Play

I shoot a lot of pool. Being a pool shooter you meet a whole lot of characters. These characters are often very colorful in this fraternity of misfits. One thing you hear of lot of is chatter. But chatter like you’ve never heard before. Everyone’s got their own way to talk trash. One of my favorite things I like to say to somebody when I’m about to pull off a great shot is to look up, smile, and bashfully say, “I didn’t want to have to show you this one.”

So believe me when I tell you about this off the radar stock that, “I didn’t want to have to show you this one.” Sometimes I reach down into my bag of tricks and find a little gem that’s been flying low so you can load the boat and make a few bucks ahead of the crowd. Today I’m talking about Zacks Rank #1 (Strong Buy) Meridian Bancorp (EBSBSnapshot Report).

Meridian Bancorp, Inc., a Maryland corporation was established in 2014 to be the fully public stock holding company for East Boston Savings Bank. Meridian Interstate Bancorp, Inc., the former bank holding company, merged into Meridian Bancorp, Inc. and now ceases to exist following the completion of a “second-step” conversion from a two-tier mutual holding company structure effective July 28, 2014. That’s where the EBSB comes comes in.

East Boston Savings Bank is a Massachusetts chartered stock savings bank originally founded in 1848. They operate twenty-seven full-service branch locations and a loan center in the greater Boston metropolitan area.

The stock has been riding higher on the back of several earnings surprises to the upside. Over the last four quarters the company has crushed consensus by an average of 83%.This latest streak of wins began before 2010. Take a quick look at the price and earnings surprise chart above and you can see the effect these surprises have had on the stock price.

Analysts have been increasing their expectations for the stock recently, jacking up their estimates for the current quarter, current year and next year. Our Zacks Consensus Estimate for the current year has jumped from 7 cents to 10 cent, while the current year consensus has risen from 28 cents just 90 days ago to 44 cents today. The estimate revisions coupled with the recent surprises are a big reason for its Zacks Rank #1 (Strong Buy).

Speaking of the price, EBSB has a very nice bottom left to top right steady incline over the last several years. The slow and steady ascent has been met with very few pullbacks. Lately there have been a couple of very bullish spikes in price. The most recent run off the 100 day moving average took the stock from $11 to nearly $12.75 I just a few short days. Currently the stock is setting up a bullish triangle pattern just below the recent 52 week high. Investors who get in ahead of the next earnings report could be in for some very bullish price action in the near future.