Washington Trust Bancorp surges 12% on swing to Q4 profit
Regional bank's earnings turnaround drives breakout above 50-day moving average with heavy volume
Washington Trust Bancorp shares surged 11.8% on Tuesday, extending to $33.75, after the Rhode Island-based regional bank reported a fourth-quarter profit that marked a significant turnaround from prior period losses. The $3.56 gain pushed shares above their 50-day moving average of $29.49 on trading volume exceeding 115,000 shares, signaling renewed investor confidence in the $580 million market-cap lender.
The earnings swing represents a notable inflection point for Washington Trust, which had been grappling with negative earnings across its trailing twelve-month period. The bank's most recent financial data showed diluted earnings per share of -$1.66 before the fourth-quarter recovery, making the return to profitability a critical milestone for management and shareholders alike.
Washington Trust, headquartered in Westerly, Rhode Island, operates through its subsidiary The Washington Trust Company and provides banking, investment, and wealth management services across New England. The company's forward price-to-earnings multiple now stands at 9.22, suggesting investors see value in the earnings recovery even as the stock trades above the current analyst consensus target of $31.00, according to market data.
The technical breakout carries additional significance for investors. At $33.75, Washington Trust shares established a new 52-week high, surpassing the previous peak of $31.93. The surge above the 50-day moving average accompanied by elevated volume indicates institutional conviction behind the move, as roughly 69% of the bank's shares are held by institutional investors.
Investors are also receiving an attractive dividend yield of 7.42% based on the company's annual dividend of $2.24 per share. The bank's price-to-book ratio of 1.08 suggests shares trade at a modest premium to the company's book value of $27.98, a level that could support further upside if the earnings momentum continues.
The regional banking sector has faced pressure in recent quarters amid interest rate volatility and economic uncertainty. Washington Trust's earnings turnaround contrasts with some of its peers that continue to navigate margin compression and credit quality concerns. The bank's operating margin of 30.6% over the trailing twelve months indicates underlying profitability strength that the fourth-quarter results have now translated into net earnings.
Analyst sentiment remains mixed, with one buy rating, two holds, and one strong sell among covering analysts. However, the earnings beat and technical strength could prompt revisions to price targets and recommendations in coming days, particularly if management provides guidance suggesting sustainable profitability through 2025.
Looking ahead, investors will focus on whether Washington Trust can maintain its earnings recovery trajectory in the first quarter. Key metrics to watch include net interest margin performance as the Federal Reserve's rate policy evolves, loan growth trends, and credit quality indicators. The bank's community banking focus throughout Connecticut, Massachusetts, and Rhode Island provides exposure to the Northeast regional economy, which has shown relative resilience compared to other areas of the country.
With Tuesday's rally, Washington Trust is now trading at 4.95 times trailing sales, reflecting investor optimism about the earnings turnaround's sustainability. The stock's beta of 0.87 suggests slightly lower volatility than the broader market, which could appeal to income-focused investors seeking both capital appreciation and the bank's robust dividend yield.