First Financial Bankshares (Nasdaq: FFIN) – is a Texas-based bank that focuses on commercial banking products. The company also provides deposit accounts and loans to professionals, individuals, and farm and ranch operations. The bank had 73 locations as of January 24. The headquarters is in Abilene, Texas and the company was founded in 1890.
First Financial’s earnings have grown at a rate of 8% per year over the last three years, but they jumped by 30% in the fourth quarter and are expected to grow by 18% for 2019 as a whole.
The company’s sales have grown at a rate of 9% per year over the last three years and they were up by 18% in the most recent quarterly report.
The company shows a return on equity and its profit margin is a whopping 45.3%.
The company doesn’t have any long-term debt and that is a plus in the current economic environment.
The sentiment indicators for First Financial are rather bearish with six analysts following the stock and not a single “buy” rating in the bunch.
There are five “hold” ratings and one “sell” rating. The short interest ratio is also above average at 3.9. Remember, I view sentiment in a contrarian manner, so a high short interest ratio and low analysts ratings are good things.
Turning our attention to the chart for First Financial we see that the stock has been trending higher for over three years now and a trend channel has formed that defines the various cycles within the longer term trend. The stock just hit the lower rail of the channel before turning higher.
In addition to hitting the lower rail of the trend channel, the stock saw its 10-week RSI drop to a similar reading to what it saw in December, and on two occasions in 2017. Each of those dips in the RSI preceded rallies in the stock.
Suggested strategy: Buy FFIN with a maximum entry price of $61.50. I would set a target of at least $82.50 over the next 6 to 9 months (for a potential return of 35%-plus from here). I would also suggest a stop at $55.00.
— Rick Pendergraft
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