Can Independent Bank Corp. Run Higher on Rising Earnings Estimates?

Independent Bank Corp. INDB appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.

The upward trend in estimate revisions for this holding company for Rockland Trust reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Independent Bank Corp. There has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $1.20 per share for the current quarter, which represents a year-over-year change of -13.04%.

Over the last 30 days, the Zacks Consensus Estimate for Independent Bank Corp. has increased 9.09% because three estimates have moved higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $4.75 per share, representing a year-over-year change of -12.36%.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Independent Bank Corp. Over the past month, three estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 6.5%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Independent Bank Corp. currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Investors have been betting on Independent Bank Corp. because of its solid estimate revisions, as evident from the stock's 32% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.

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