Banks, large and small, offer the same services to customers:
- Checking and savings accounts.
- Personal and business loans.
- Credit and debit cards.
Looking at the surface level, it’s hard to tell one from another.
You need to look deeper at a bank’s profitability and assets to determine if it’s a good investment.
One metric that captures the profitability of a bank is its net interest income.
We calculate this by subtracting interest expense (any costs related to managing loans and other interest-earning assets) from a bank’s interest income (income from anything that earns interest).
It’s like the gross profit for banks.
The chart below shows the net interest income of banks insured by the Federal Deposit Insurance Corporation.
As you can see, banks have steadily raked in net interest income since 2010.
When I see this trend, I look to our Stock Power Ratings system to find bank stocks that stand out from the pack.
Today's Power Stock does just that.
It’s a Pennsylvania-based bank that’s been around since 1870: Norwood Financial Corp. (Nasdaq: NWFL).
And it rates a perfect 100 out of 100 within our proprietary Stock Power Ratings system!
NWFL's Stock Power Ratings in January 2023.
NWFL, like other banks, offers traditional banking services that I mentioned above.
But this stock stands out for other reasons. I’ll tell you why we expect it to beat the broader market by 3X in the next 12 months below.
Norwood Financial Stock: Strong Growth + “Maximum Momentum”
Norwood Financial just closed out an outstanding quarter:
- Net interest income was $18.2 million — a 7.7% bump from the same period a year ago!
- Its total earnings per share (EPS) was $1 — up 17.6% from the same quarter in 2021!
Those are strong revenue figures.
Toss in a one-year annual sales growth rate of 20% and an earnings-per-share growth rate of 45.7% and you can see why NWFL earns a 93 on our growth factor.
This tells us the company is increasing its profitability from its core operations — which is great for investors.
Let’s dive into its market-beating momentum:
Created in January 2023.
From its recent low in June 2022 to its December high, NWFL raked in a 49.3% gain.
As I write, NWFL has passed its previous 52-week high … and I’m confident it has more room to run.
Over the last 12 months, NWFL stock has jumped 28.8%. Its banking industry peers are averaging a 19.8% decline over the same time.
Norwood Financial stock scores 100 overall on our proprietary Stock Power Ratings system.
That means we're “Strong Bullish” and expect it to beat the broader market by at least 3X in the next 12 months.
Bonus: NWFL’s 3.39% forward dividend yield nets investors $1.16 per share per year for every share they own.
On the surface, most banks … big and small … offer the same traditional services to customers.
You have to dive deeper and look at things like net interest income (and our Stock Power Ratings system) to find banks that stand apart from the rest.
With strong net interest income and EPS growth, NWFL stock is a strong contender for your portfolio.
Stay Tuned: How Adaptive Investing™ Will Help You Thrive in 2023
Remember: We publish Stock Power Daily five days a week to give you access to the top companies that our proprietary Stock Power Ratings identify!
Stay tuned tomorrow, where I’ll show you how you can use Adaptive Investing™ to feel confident buying and selling stocks in 2023.
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets