Pinnacle’s 3Q Profit Beats Estimates; Street Sees 21% Upside

Shares of Pinnacle Financial Partners gained 2.2% in the extended trading session on Tuesday after the bank’s quarterly adjusted EPS of $1.45 surpassed analysts’ expectations of $1.10 and came in a penny ahead of the year-ago quarter’s EPS of $1.44.

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Pinnacle Financial’s (PNFP) 3Q revenues grew 8.8% to $297.7 million year-over-year and beat Street estimates of $279.3 million. The bank’s net interest income increased 5.5% to $206.6 million from $195.8 million in the year-ago quarter. However, net-interest margin fell to 2.82% from 3.43%.

Pinnacle’s CEO M. Terry Turner said, “Late in the first quarter, we transitioned our firm from an offensive to a defensive posture, which entailed things like allocating significant resources to the re-risk grading of a significant portion of our loan portfolio and limiting the continuous recruitment and hiring of revenue producers, which has been a key driver historically in our outsized growth.” (See PNFP stock analysis on TipRanks).

Concurrent with its 3Q results, Pinnacle revealed that its board of directors approved a quarterly cash dividend of $0.16 per share to be payable on November 27 to the shareholders on record as of November 6. Management also declared a dividend of approximately $3.8 million or $16.88 per share for its 6.75% Series B Non-Cumulative Perpetual Preferred Stock. The dividend will be payable on December 1 to shareholders of record date as of November 16.

On Sept. 29, Truist Financial analyst Jennifer Demba raised the stock’s price target to $54 (33.8% upside potential) from $48 and reiterated a Buy rating. In a broader research note on Regional and Community Banks, Demba said that lower net-charge-offs are likely to drive better-than-expected 3Q earnings for banks under the category including Pinnacle Financial. She also expects strong mortgage fees and improvement in customer fees to drive growth for some select regional/community banks.

Currently, the Street is cautiously optimistic on the stock with a Moderate Buy analyst consensus. With shares down nearly 37% year-to-date, the average price target of $48.67 implies upside potential of about 20.6% to current levels.