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.


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