Capital Bancorp (CBNK) Soars 10.3%: Is Further Upside Left in the Stock?

Capital Bancorp (CBNK) shares rallied 10.3% in the last trading session to close at $39.31. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 0.8% loss over the past four weeks.

Capital Bancorp shares rallied during the last trading session after Peoples Bancorp announced an agreement to acquire the company in an all-stock transaction valued at approximately $728.1 million. Under the deal, CBNK shareholders will receive 1.11 Peoples shares for each Capital Bancorp share, implying a value of $43.75 per share.

The implied deal price represented a sizeable premium to CBNK’s Sept. 29 closing price of $35.65, fueling investor optimism. The merger is expected to create a larger, more diversified financial-services franchise with roughly $14 billion in assets and an expanded Mid-Atlantic presence, while offering Capital Bancorp shareholders greater scale and liquidity.

This company is expected to post quarterly earnings of $0.91 per share in its upcoming report, which represents a year-over-year change of +26.4%. Revenues are expected to be $68.98 million, up 9.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Capital Bancorp, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CBNK going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Capital Bancorp is part of the Zacks Banks - Northeast industry. Shore Bancshares (SHBI), another stock in the same industry, closed the last trading session 0.4% lower at $22.39. SHBI has returned -1.2% in the past month.

Shore Bancshares' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.54. Compared to the company's year-ago EPS, this represents a change of +12.5%. Shore Bancshares currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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