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Wall Street’s Best Digest Daily Alert: (CHFN)

This thrift is growing at double-digit rates and beat analysts’ earnings estimates by $0.11 last quarter.

Charter Financial (CHFN)
From Upside

Founded in 1954, Charter Financial (CHFN) is a fast-growing thrift with 20 branches in Alabama, Georgia, and Florida. Unlike traditional banks, thrifts typically have greater access to low-cost federal funds, helping them offer higher savings rates and competitive mortgage loans.

Charter focuses on commercial real estate, construction loans, and residential mortgages. In fiscal 2016 ended September, per share earnings more than doubled to $0.79. Revenue, consisting of net interest income and noninterest income, jumped 37%. Net loans surged 39%, while total assets rose nearly 40% to $1.4 billion. On Sept. 30, Charter had deposits of $1.2 billion, up 63%.

The stock’s Overall score of 99 places it among the top nine of the 115 thrifts in Quadrix, which earn an average score of 70. Charter boasts impressive scores in Momentum (97) and Earnings Estimates (98). Steady loan growth, potential acquisitions, and improved cost control should help boost profit margins and drive earnings. The single profit estimate for fiscal 2017, up over the past month, projects per-share earnings growth of 18% to $0.93.

Shares have advanced 20% over the past year but still trade at a reasonable 17 times estimated 2017 earnings. Charter is being initiated as a Buy.

Richard J. Moroney, CFA, Upside,, 800-233-5922, January 2017