AUB - WesBanco: Acquisition Completed And Slightly Undervalued

2025-04-09 14:04:22 ET

Summary

• Management expects EPS accretion of 42%, due to operating synergies, mainly cost savings.
• Quant Rating is rating it a Strong Buy, with a score of 4.75. I discuss some issues about it in further detail.
• However, it wasn't growing in revenues in the last 5 years, nor did it have good profitability (ROE).
• The New CEO and the acquisition are bringing winds of change that can deliver good surprises in the future.
• I see upside potential of 20% for the next 12 months, on a conservative scenario.

Thesis

I rate WesBanco, Inc. ( WSBC ) as a "Buy," mainly because of the recent "Tariff Selloff" that made the stock trade at 8.4x Price to Earnings Fwd (Non-Gaap). I see potential upside of 20% for the next 12 months. I also think there may be some merger synergies due to cost savings, but I'm a little bit more skeptical about that. Also, it's performing slightly better than its peers. Today, April 7th, is ranked 48th out of 685 in Financials on Seeking Alpha and 13th out of 250 in Regional Banks. That implies that WesBanco has a higher score than 93% of financials and more than 95% of regional banks. Quant score right now is 4.74, rating it as a "Strong Buy".

As we can see in the quant summary, it's screaming a "BUY" or even a "STRONG BUY" but there are two issues: one is profitability. Return on Equity is 5.62% when the same industry median is at 10.44%....

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