If you are planning to invest in banking stocks, this is perhaps the best time. That’s because banking stocks have been rallying since the presidential election. Expectations of fewer regulations and a rising interest-rate environment in the Trump era are likely to benefit the overall finance industry, with banks emerging as the biggest winner.
The latest hike in interest rate by the Fed further instills confidence in the finance sector. This should particularly help banks to benefit from expanding margins.
Among others, we find Popular, Inc. BPOP as a solid pick based on its strong fundamentals.
Shares of this company increased 54.6% in 2016, outpacing the 40.4% gain for the Zacks categorized Southeast Banks industry.
Looking at the estimate revisions trend, Popular, Inc.’s earnings estimates for the current year have been revised 4.3% upward, in the last 60 days. As a result, the stock, currently, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Driving Factors
Earnings Per Share Growth: In the last 3-5 year period, Popular, Inc. witnessed earnings per share (EPS) growth of 23.1%, higher than the industry average of 10.9%. Notably, the company has a decent earnings surprise history, having delivered positive surprises in three of the trailing four quarters with an average beat of 1.5%.
Further, the company’s earnings are projected to grow 5.4% and 6.9% in 2017 and 2018, respectively.
Strong Leverage: Popular, Inc.’s debt/equity ratio, which stands at 0.00, indicates that the company uses no debt to finance its operations. On the other hand, the industry’s debt/equity ratio stands at 0.31. This reflects that the company will have financially stable even in adverse economic conditions.
Stock Looks Undervalued: Popular, Inc.’s stock looks undervalued with respect to its price-to-earnings (P/E) and price-to-book (P/B) ratios. It has a P/E ratio of 11.13, compared with the industry average of 17.92. Moreover, the company’s P/B ratio of 0.82 is below the industry average of 1.45.
Moreover, Popular, Inc. has a Value Score of ‘A.’ The Value Score Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of ‘A’ or ‘B,’ when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Stocks Worth a Look
Some other stocks worth considering in the same space include Fidelity Southern Corp. LION, Bank of the Ozarks, Inc. OZRK and Synovus Financial Corp. SNV.
Fidelity Southern Corporation witnessed an upward earnings estimate revision of 4.6% for the current year, in the last 60 days. Its share price increased 25.1% in the last six months. It currently carries a Zacks Rank #1.
Bank of the Ozarks carries a Zacks Rank #2. For the current year, in the last 60 days, its Zacks Consensus Estimate was revised 1.3% upward. Its share price increased 41.4% in the last six months.
Synovus Financial also carries a Zacks Rank #2. It witnessed an upward earnings estimate revision of 3.2% for the current year, in the last 60 days. Its share price increased 28.8% in the last six months.
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Synovus Financial Corp. (SNV): Free Stock Analysis Report
Popular, Inc. (BPOP): Free Stock Analysis Report
Bank of the Ozarks (OZRK): Free Stock Analysis Report
Fidelity Southern Corporation (LION): Free Stock Analysis Report
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