Like many banking stocks, ACNB is trading at ten times earnings. The rest of the market is inflated well above that ratio. Eventually, this stock will catch up the average of the rest of the market. If that happened to this stock it would be trading at 15 times earnings with a 50% increase in its stock price. Taht could happen quickly.
We determine the current worth of ACNB Corporation using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of ACNB based exclusively on its
fundamental and basic
technical indicators. By analyzing ACNB's
financials, quarterly and monthly indicators, and related drivers such as
dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of
ACNB's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of ACNB. We calculate exposure to ACNB's
market risk, different
technical and
fundamental indicators, relevant financial multiples and ratios, and then
comparing them to ACNB's related companies.
ACNB Investment Alerts
ACNB investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring ACNB Corporation performance across your portfolios.Please check all
investment alerts for ACNB
ACNB Valuation Ratios as Compared to Competition
Our valuation model uses many indicators to compare ACNB value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across ACNB competition to find
correlations between indicators driving the intrinsic value of ACNB.
ACNB Gross Profit
ACNB Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing ACNB previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show ACNB Gross Profit growth over the last 10 years. Please check ACNB's
gross profit and other
fundamental indicators for more details.
Breaking it down a bit more
ACNB is a small, regional bank primarily in the Southwestern region of the United States. They are a traditional bank offering depositing and lending services as well as financial services to its customers.
I have been very bullish on the banking industry, and for good reason. As it turns out, the numbers are saying that is a good call. Here is the interest income and earnings per share for this particular bank over the past several years.:
2011: $41.8 $1.43
2012: $40.4 $1.49
2013: $37.6 $1.56
2014: $37.5 $1.71
2015: $39.5 $1.83
Interest income has been a bit tough to earn over the past many years. The Federal Reserve took extreme measures to shore up economic activity in the wake of the Great Recession. Interest income, for banks, is earned from the difference between the interest paid out on deposits and what a bank brings in via interest income from funds lent out. However, interest rates have been exceptionally low. Because of that there has been very little room to earn interest income.
The economy is expanding at a nice clip. Incomes, which have been stagnant for years, are increasing. Expenditures by Americans are increasing. Business is moving forward and will continue to expand. And, interest rates are going to go up as a result of the expansion that the nation is finally seeing. When interest rates increase, then banks will be able to earn a great deal more revenue from its loan portfolio.
Because of the financial crisis of 2008, banks have fallen out of favor. Bank stocks have been left behind in the latest stock market surge. In fact, the average earnings-per-share ratio is approximately 15 from a historical basis. However, the average today is upwards of 25. This is noteworthy. At the same time, despite such above average earnings-per-share ratios, ACNB is trading at a mere 10-times earnings. That makes this stock, as well as many other bank stocks, bargains.
The reason why this stock is such a bargain is simple: Investors have been slow to getting back into buying bank stocks. These stocks were the reasons that the entire financial system almost collapsed completely. Naturally, there is hesitation to getting back into this market. But, the banking sector now is surrounded by laws that will not allow for a repeat.
The fundamentals for banking stocks are strong. With the economy expanding, and with that interest rates heading higher, then banks in general are going to be more profitable. These are the reasons why I have been bullish on banks.
But, this bank itself stands out a bit. During 2013, this was a period of notable economic drawdown. Yet, ACNB weathered this drawdown well and emerged with expanding earnings off of only slight growth in interest income. If you have a bank that is earning during larger periods of economic slowdown, when the economy does expand a bank will do well in that kind of landscape. And, the earnings have been turning higher. 2016’s final numbers are expected to exceed the previous year’s levels. That upward trajectory on earnings is what makes for a solid investment.
With an expanding economy and interest rates heading higher this bank is proving that it will increase its earnings in that landscape. This stock is underpriced compared to the rest of the market, making it a bargain. Holding on to this stock after adding it into your portfolio and you will do very well in the long run. A bargain like this can’t be passed up.
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David Taylor is a Senior Member of Macroaxis Editorial Board - Sector Analysis. David is a professional writer who writes for multiple investment news outlets. His primary focus is dynamic movements in financial markets and effects of economic volatility on North American industries and sectors. David has many years of experience in financial service industry including working with major banks as a FX trader. In his free time, he does a lot of outdoors type activities including rock climbing, mountain biking, hiking, mountaineering and kayaking in the summer, and snowboarding in the winter.
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