Dj Townebank, Inst Holders, 3Q 2024 (Town)

As of Nov. 22, 2024, two stocks in the financials sector could be flashing a real warning to investors who value momentum as a key criteria in their trading decisions.

The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down. When compared to a stock’s price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered overbought when the RSI is above 70, according to Benzinga Pro.

Here's the latest list of major overbought players in this sector.

TowneBank

• On Oct. 23, Towne Bank reported worse-than-expected third-quarter revenue. “Our third quarter results continued to deliver increased net interest income and noninterest income contributions from our diverse business model which were in line with expectations. We remain committed to prudent balance sheet management strategies. We were also excited to announce our partnership with Village Bank which will meaningfully enhance our Richmond presence, which is core to our franchise future growth. Lastly, the recently released FDIC Deposit Market Share Report for 2024 continues to demonstrate the strength of our Main Street banking model and core deposit franchise, resulting in the #1 market share, or 30%, in our legacy Virginia Beach-Norfolk-Newport News, VA-NC MSA,” said G. Robert Aston, Jr., Executive Chairman.
• The company's stock gained around 32% over the past month and has a 52-week high of $36.67.
• RSI Value: 75.55
• TOWN Price Action: Shares of TowneBank gained 1.2% to close at $35.31 on Thursday.

Wisdomtree Inc

• On Oct. 25, WisdomTree posted upbeat quarterly results. “Our strong third-quarter results demonstrate how we are capitalizing on key secular growth trends, such as the expansion of our models business and our leadership in tokenization. As demand for efficient portfolio solutions continues to grow, we are broadening our reach in the advisor space while positioning ourselves at the forefront of blockchain-enabled finance. Platforms like WisdomTree Prime® and WisdomTree Connect™ are integral to our future growth strategy, offering innovative solutions that meet the evolving needs of both retail and institutional clients. We believe these initiatives will drive substantial long-term value for our stakeholders.”
• The company's stock gained around 12% over the past month and has a 52-week high of $12.14.
• RSI Value: 79.49
• WT Price Action: Shares of Wisdomtree gained 2.3% to close at $12.00 on Thursday.

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TowneBank (TOWN) came out with quarterly earnings of $0.58 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.60 per share a year ago. These figures are adjusted for non-recurring items.

A quarter ago, it was expected that this community bank would post earnings of $0.49 per share when it actually produced earnings of $0.57, delivering a surprise of 16.33%.

Over the last four quarters, the company has surpassed consensus EPS estimates just once.

TowneBank, which belongs to the Zacks Banks - Southeast industry, posted revenues of $175.63 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.32%. This compares to year-ago revenues of $172.86 million. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

TowneBank shares have added about 13.3% since the beginning of the year versus the S&P 500's gain of 22.7%.

What's Next for TowneBank?

While TowneBank has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for TowneBank: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.47 on $169.4 million in revenues for the coming quarter and $2.12 on $690.1 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Southeast is currently in the bottom 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, Seacoast Banking (SBCF), is yet to report results for the quarter ended September 2024. The results are expected to be released on October 24.

This holding company for Seacoast National Bank is expected to post quarterly earnings of $0.36 per share in its upcoming report, which represents a year-over-year change of -2.7%. The consensus EPS estimate for the quarter has been revised 1.2% higher over the last 30 days to the current level.

Seacoast Banking's revenues are expected to be $128.57 million, down 6.2% from the year-ago quarter.

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