Associated Banc (ASB) Sets New 1-Year High and Low at $27.85

Associated Banc-Corp (NYSE:ASB) hit a new 52-week high and low on Monday . The company traded as low as $27.85 and last traded at $27.72, with a volume of 68897 shares. The stock had previously closed at $27.25.

A number of brokerages have weighed in on ASB. Zacks Investment Research upgraded shares of Associated Banc from a “hold” rating to a “strong-buy” rating and set a $31.00 price objective on the stock in a report on Tuesday, May 1st. Barclays upped their target price on shares of Associated Banc from $28.00 to $30.00 and gave the stock an “equal weight” rating in a research note on Monday, April 23rd. DA Davidson upped their target price on shares of Associated Banc from $25.00 to $26.00 and gave the stock a “neutral” rating in a research note on Friday, April 20th. Sandler O’Neill upgraded shares of Associated Banc from a “hold” rating to a “buy” rating in a research note on Friday, April 20th. Finally, Robert W. Baird upgraded shares of Associated Banc from a “neutral” rating to an “outperform” rating in a research note on Friday, April 20th. One investment analyst has rated the stock with a sell rating, nine have issued a hold rating, two have issued a buy rating and one has given a strong buy rating to the company’s stock. Associated Banc currently has an average rating of “Hold” and an average target price of $27.40.

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The company has a market capitalization of $4.60 billion, a PE ratio of 18.22, a P/E/G ratio of 1.97 and a beta of 1.00. The company has a debt-to-equity ratio of 0.91, a quick ratio of 0.87 and a current ratio of 0.88.

Associated Banc (NYSE:ASB) last issued its earnings results on Thursday, April 19th. The bank reported $0.50 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.41 by $0.09. The firm had revenue of $300.25 million for the quarter, compared to the consensus estimate of $292.49 million. Associated Banc had a net margin of 18.87% and a return on equity of 8.53%. During the same quarter in the prior year, the firm posted $0.35 earnings per share. equities analysts expect that Associated Banc-Corp will post 1.95 earnings per share for the current fiscal year.

The business also recently disclosed a quarterly dividend, which will be paid on Friday, June 15th. Investors of record on Friday, June 1st will be given a dividend of $0.15 per share. The ex-dividend date of this dividend is Thursday, May 31st. This represents a $0.60 dividend on an annualized basis and a yield of 2.16%. Associated Banc’s dividend payout ratio (DPR) is 39.47%.

In related news, insider William M. Bohn sold 19,011 shares of the stock in a transaction that occurred on Friday, February 23rd. The shares were sold at an average price of $24.82, for a total transaction of $471,853.02. Following the transaction, the insider now owns 59,290 shares in the company, valued at $1,471,577.80. The sale was disclosed in a legal filing with the SEC, which can be accessed through the SEC website. Also, CEO Philip B. Flynn sold 10,000 shares of the stock in a transaction that occurred on Monday, April 30th. The shares were sold at an average price of $26.72, for a total transaction of $267,200.00. Following the transaction, the chief executive officer now owns 114,684 shares in the company, valued at approximately $3,064,356.48. The disclosure for this sale can be found here. In the last 90 days, insiders have sold 151,879 shares of company stock worth $3,971,509. 2.13% of the stock is owned by insiders.

A number of institutional investors have recently modified their holdings of ASB. Schwab Charles Investment Management Inc. lifted its position in Associated Banc by 6.9% during the fourth quarter. Schwab Charles Investment Management Inc. now owns 924,610 shares of the bank’s stock valued at $23,486,000 after purchasing an additional 59,574 shares during the period. State of Alaska Department of Revenue bought a new position in Associated Banc in the fourth quarter worth approximately $228,000. James Investment Research Inc. bought a new position in Associated Banc in the fourth quarter worth approximately $1,770,000. WoodTrust Financial Corp bought a new position in Associated Banc in the fourth quarter worth approximately $212,000. Finally, Cubic Asset Management LLC raised its position in Associated Banc by 81.8% in the fourth quarter. Cubic Asset Management LLC now owns 30,010 shares of the bank’s stock worth $762,000 after acquiring an additional 13,500 shares during the period. Institutional investors own 76.39% of the company’s stock.

Associated Banc Company Profile

Associated Banc-Corp, a bank holding company, provides various banking and nonbanking products to individuals and businesses primarily in Wisconsin, Illinois, and Minnesota. Its Corporate and Commercial Specialty segment offers deposit and cash management solutions, such as commercial checking and interest-bearing deposit products, cash vault and night depository services, liquidity solutions, payables and receivables solutions, and information services; and lending solutions, including commercial loans and lines of credit, commercial real estate financing, construction loans, letters of credit, leasing, asset based lending, and loan syndications.

Nordstrom, Inc.'s Post-Earnings Stock Slump Is a Buying Opportunity

Nordstrom (NYSE:JWN) returned to earnings growth last quarter, as the reduced corporate tax rate helped the upscale retailer post a double-digit increase in earnings per share. Investors still dumped Nordstrom stock in after-hours trading on Thursday, punishing the company for weak comparable-store sales growth.

However, Nordstrom maintained its full-year comp sales guidance and even improved its EPS forecast (albeit just slightly). As a result, Nordstrom stock's 7% after-hours decline seems like a massive overreaction -- and a nice buying opportunity for long-term investors.

Sales momentum slows

In the first quarter, Nordstrom's revenue rose 6.2% to $3.56 billion, boosted by store openings, the timing of a promotional event, and rising credit card income. Comparable-store sales -- a metric that excludes these three factors -- rose 0.6%. This was made up of a 0.7% increase in the full-line segment and 0.4% growth in the Nordstrom Rack off-price business.

Investors were disappointed by this comp sales result. On average, Wall Street analysts had expected 1.1% comp sales growth. Additionally, the 0.6% increase marked a sharp slowdown relative to the fourth quarter, when Nordstrom posted a 2.6% comp sales gain.

Nordstrom saw a sales slowdown in its Nordstrom Rack stores last quarter. Image source: Nordstrom.

On the other hand, Nordstrom's Q1 comp sales gain was roughly in line with its 0.8% full-year increase in fiscal 2017. During the company's earnings call, management attributed the modest slowdown to unseasonably cold weather during parts of the quarter and some changes to the company's marketing.

Profitability holds up nicely

Even if Nordstrom's sales performance was subpar, the company more than made up for it with solid profitability in the first quarter. Operating profit ticked up slightly to $153 million from $151 million a year earlier. A modest decline in gross margin and a modest increase in operating expenses were fully offset by higher sales and a greater than 20% jump in credit card income.

Thanks to the benefit of tax reform, EPS reached $0.51 last quarter. That was up from $0.37 a year earlier, or $0.43 excluding a special charge related to refinancing some debt.

Nordstrom's stable profitability and strong EPS growth was particularly impressive because the company opened its highly regarded flagship men's store in Manhattan last month. As a result, Nordstrom incurred substantial pre-opening costs during the first quarter.

Over the past several years, Nordstrom has experienced severe margin headwinds related to the long-term investments it has been making in its business. The fact that it was able to keep its profit margin roughly stable last quarter despite incurring pre-opening costs for the Manhattan men's store validates management's claim that Nordstrom is finally reaching an inflection point in terms of profitability.

The outlook remains solid

Despite its soft Q1 sales performance, Nordstrom maintained its full-year guidance for 0.5% to 1.5% comp sales growth. Additionally, the company's solid margin performance encouraged management to bump up the low end of the EPS guidance range by $0.05. Nordstrom's new forecast calls for EPS between $3.35 and $3.55 in fiscal 2018.

After falling 7% in after-hours trading on Thursday evening, Nordstrom stock trades for less than 14 times the midpoint of this updated EPS forecast. Furthermore, free cash flow has started to routinely outpace EPS as Nordstrom's capex has moderated, making the stock even cheaper than this earnings multiple would imply.

This makes Nordstrom stock a compelling bargain in light of its recent margin stabilization. As some of its recent investments start to pay off, the company has an opportunity to improve its profitability significantly.

Even if comp sales increases remain modest, a return to margin expansion would drive strong EPS growth, unlocking substantial upside for Nordstrom stock. As a result, I plan to hold on to all of my shares for the foreseeable future, while reinvesting the dividends to gradually add to my stake in Nordstorm.