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Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor provides marketing and data services to Validea.ca and receives compensation. Try it.
Headquartered in Franklin, Tennessee, Franklin Financial Network (FSB-N) was founded by a group of veteran Tennessee bankers in 2007. Its wholly-owned bank subsidiary, Franklin Synergy Bank, provides a small range of banking and related financial services with a focus on service to small businesses, corporate entities, local governments and individuals. Franklin has consolidated total assets of $2.3-billion as of March 31, 2016, and currently operates through 12 branches and one loan production office in the Williamson and Rutherford Counties within the Nashville metropolitan area.
Its financials have been pounded lately, but FSB has held up well — up 3% over last month. It trades for 18.6x trailing 12-month EPS and just 13.2x projected 12-month EPS.
It's grown earnings at a 20-per-cent pace over the long-term (using an average of the 3-. 4- and 5-year EPS growth rates), which the Peter Lynch-based model likes. The Lynch model also likes its 0.92 P/E-to-growth ratio.
The Martin Zweig-based model likes that EPS growth has been driven by strong revenue growth, not one-time measures or share buybacks; sales have grown at a 38-per-cent clip over the long term (using an average of the 3-, 4- and 5-year sales growth rates. The Zweig model also likes that EPS growth accelerated in the last quarter (57 per cent.)
FSB's 12-month relative strength of 91 impresses the Motley Fool-based strategy, which also likes that its profit margins are high and have been rising (23.4 per cent vs 19.4 per cent a years ago and 18.3 per cent two years ago.)
The stock has an 8-per-cent equity/assets ratio, beating the 5-per-cent target the Lynch model uses on financials, and a 1.01-per-cent return-on-assets ratio, beating the Lynch model's 1-per-cent target.
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