Financials 830

Financial stocks are still struggling, down 21.9% so far this year, making these ideas undervalued.

Fauquier Bankshares, Inc. (FBSS) | Daily Alert May 28

Today we added a little more Fauquier Bankshares, Inc. at $12.75: cheap, smart old bankers, nice yield, plus good markets and good asset quality. Trades plenty some days. Over 110,000 shares left on its buyback; should be bought soon. The company owns most of its locations as well—maybe some hidden value there also. Insiders buying some this month. NWIN added a few shares under $30. Many insiders have also been buying.

Fauquier Bankshares’ regulatory capital ratios continue to be deemed “Well Capitalized,” the highest category assigned by the Federal Deposit Insurance Corporation (FDIC). At September 30, 2008, the company’s leverage ratio was 9.38%, compared with 9.35% one year earlier, and its total risk-based capital ratio was 13.13% compared with 12.71% at the same respective dates.

“With our level of capital strength, we can continue to extend credit and execute our growth strategies, including the building of new branch locations,” said Randy Ferrell, Fauquier President and CEO. While we are seeing some increase in our non-performing loans, it has been commensurate with the current economic conditions and continues to compare favorably with our bank peers. Our conservative principles have kept us away from the sub-prime mortgage and other high-risk lending activities that are making headlines recently.”

Fauquier reported the following performance strength indicators for the quarter ended September 30, 2008:
— Net interest income before the loan loss provision for the third quarter of 2008 increased by 5.2% compared with the same quarter in 2007.
— Net interest margin of 4.10% was slightly higher in the third quarter versus the same period in 2007.
— Total deposits grew $17.4 million or 4.5% from June 30, 2008.
— Charge-offs, net of recoveries, for the third quarter of 2008 was $66,000 compared with $114,000 for the same quarter in 2007.

Ferrell said, “The primary mission of The Fauquier Bank is to provide our community with the financial products and services that they need during both good times and difficult times. We continue to make loans available to our community as we have done during our 106-year history, and our management and Board are confident that we can continue to do so without requiring government support.”

Wow that’s some great numbers in hard times.

Douglas Hughes, Hughes Investment Managementbanknewsletter.com, 888-814-7575, May 21, 2020

 

PJT Partners Inc. (PJT) | Daily Alert June 12

PJT Partners Inc. is an advisory-focused investment bank. The company offers an array of strategic advisory, restructuring, and special situations and private fund advisory and placement services to corporations, financial sponsors, institutional investors, and governments. It provides, through Park Hill Group, private fund advisory and placement services for alternative investment managers, including private equity funds, real estate funds and hedge funds. Its advisory business offers a range of financial advisory and transaction execution capability, including mergers and acquisitions, joint ventures, minority investments, asset swaps, divestitures, takeover defenses, corporate finance advisory, private placements, and distressed sales. Its Restructuring and Special Situations Group’s services include advising companies, creditors and financial sponsors on recapitalizations, reorganizations, exchange offers, debt repurchases, capital raises, and distressed mergers and acquisitions.

P/E/Growth: Peter Lynch Strategy

P/E/GROWTH RATIO: PASS

The investor should examine the P/E (29.18) relative to the growth rate (48.28%), based on the average of the 4 and 5 year historical eps growth rates, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for PJT (0.60) makes it favorable.

EPS GROWTH RATE: PASS

This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. This methodology likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for PJT is 48.3%, based on the average of the 4 and 5 year historical eps growth rates, which is considered ‘OK’. However, it may be difficult to sustain such a high growth rate.

EQUITY/ASSETS RATIO: PASS

This methodology uses the Equity/Assets Ratio as a way to determine a financial intermediary’s health, as it is a better measure than the Debt/Equity Ratio. PJT’s Equity/Assets ratio (9.00%) is healthy and above the minimum 5% this methodology looks for, thus passing the criterion.

RETURN ON ASSETS: PASS

This methodology uses Return on Assets as a way to measure a financial intermediary’s profitability. PJT’s ROA (11.53%) is above the minimum 1% that this methodology looks for, thus passing the criterion.

John Reese, Validea Hot List Newslettervalidea.com, 877-439-0506, May 29, 2020

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