Homestreet Inc

HomeStreet, Inc. (NASDAQ: HMST) is a diversified financial services company. The Company is principally engaged in commercial banking, mortgage banking and consumer/retail banking activities serving customers primarily in the Western United States. It operates through its subsidiaries, which include HomeStreet Bank (the Bank), HomeStreet Statutory Trusts and HomeStreet Capital Corporation.

Recent Financial and Business Updates:

• Regarding the financial position of HMST as of and for the quarter ended March 31, 2023, there were several notable developments. Cash and cash equivalents increased to USD 377 million, and uninsured deposits reached USD 1.0 billion, representing approximately 14% of total deposits.
• Excluding brokered deposits, total deposits experienced a USD 166 million, or 3%, increase, reaching USD 6.2 billion. Loans held for investment also saw growth, increasing by USD 60 million, or 1%. The book value per share was reported as USD 30.64, while the tangible book value per share stood at USD 27.87.
• In terms of operating results, a comparison between the first quarter of 2023 and the fourth quarter of 2022 revealed some changes. Net income decreased to USD 5.1 million from USD 8.5 million in the previous quarter, and earnings per fully diluted share declined to USD 0.27 from USD 0.45.
• The net interest margin decreased to 2.23% from 2.53%. Return on Average Equity (ROAE) dropped to 3.5% from 6.0% and Return on Average Tangible Equity (ROATE) decreased to 4.1% from 6.4%. Return on Average Assets (ROAA) also declined to 0.22% from 0.36%. Additionally, the efficiency ratio increased to 87.2% from 76.2%.
• HMST declared and paid a cash dividend of USD 0.35 per share in the first quarter. Furthermore, the company completed the acquisition of deposits and three branches in southern California during the first quarter of 2023.
• HomeStreet, Inc. has disclosed that its Board of Directors has granted approval for a quarterly dividend amounting to USD 0.10 per share. Shareholders recorded as of the close of business on May 10, 2023, will be eligible to receive the dividend, which is scheduled to be disbursed on May 24, 2023. The decision to reduce the dividend for this quarter to USD 0.10 per share stems from the lower earnings experienced in the first quarter of 2023 and the prevailing uncertainty surrounding interest rates and the economic environment soon.

Technical Observation (on the daily chart)

The price of HMST stock has shown a consistent downward trend since making its 52-week high on July 22, 2022, with a correction of approximately 84.48%. Currently, the stock is near an important support of USD 4.50-USD 5.50, from where price has taken supports in the past. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction with targets of USD 7.50-USD 8.00. The RSI (14 period) momentum indicator is at a value of 39.75, gaining momentum from the oversold area, with expectations of some consolidation or a short-term upward momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to HomeStreet, Inc. (NASDAQ: HMST) at the current price of USD 6.08 as of June 29, 2023, at 09:20 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is June 29, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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