TRADE INSTRUCTIONS

Date: August 29, 2016
Name: Franklin Financial Network
Symbol: FSB
Type: Open
Limit: Buy below $34 

TRADE TARGETS

Holding Period: 3 months
Average Return: 6.9%
Annualized Return: 27.8%
Stop Loss: $28.50

TRADE RATIONALE

Through its bank subsidiary, Franklin Synergy Bank, the Company provides a range of banking and related financial services. The Company focuses on the provision of services to small businesses, corporate entities, local governments and individuals. It operates through approximately 10 branches in Williamson and Rutherford counties within the Nashville metropolitan area.

This alert was triggered by Franklin’s high average earnings per share growth rate of 20% over the past five years, compared to its price-to-earnings ratio of 18 times annual profits.  In addition, the company has grown its top-line revenue at an average rate of 38% during the same time, indicating it can increase profits without resorting to cutting costs.

Despite the persistently low interest rate environment, franklin was able to produce record earnings per share during the second quarter of this year, an increase of 121% compared to the same quarter last year. Yet it still trades at only 12 times forward earnings, a clear indication that the rest of the country has not yet caught on to just how well managed of a bank Franklin has become.