Enterprise Bancorp, Inc. – Value Analysis (NASDAQ:EBTC) : September 15, 2017

Capitalcube gives Enterprise Bancorp, Inc. a score of 61.

Our analysis is based on comparing Enterprise Bancorp, Inc. with the following peers – Century Bancorp, Inc. Class A, Independent Bank Corp., Washington Trust Bancorp, Inc., Boston Private Financial Holdings, Inc., Union Bankshares, Inc., Webster Financial Corporation, Salisbury Bancorp, Inc., Northeast Bancorp, Brookline Bancorp, Inc. and Camden National Corporation (CNBKA-US, INDB-US, WASH-US, BPFH-US, UNB-US, WBS-US, SAL-US, NBN-US, BRKL-US and CAC-US).

Fundamental Overview

Enterprise Bancorp, Inc. has a fundamental score of 61 and has a relative valuation of UNDERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.72 is about median in its peer group.
  • The market expects EBTC-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • EBTC-US‘s relative capital efficiency and net profit margins are both around the median level.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • EBTC-US‘s return on equity currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • EBTC-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company is likely overinvesting in a business with only median returns.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 85.24% is around peer median suggesting that EBTC-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, EBTC-US‘s pre-tax margin of 28.31% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s comparatively low proportion of fee based income (i.e. non interest income/total revenues) of 14.76% versus peer median of 24.87% — suggests that EBTC-US‘s operating margins are likely to be more volatile. In addition, EBTC-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 69.55x is around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

Enterprise Bancorp, Inc. operates as a bank holding company. The company through its subsidiary, Enterprise Bank engages in the provision of gathering deposits. It offers commercial and consumer loan products, deposit products, and cash management services. The company also provides investment advisory and wealth management, trust and insurance services. Enterprise Bancorp was founded by George L. Duncan on February 29, 1996 and is headquartered in Lowell, MA.