A supportive operating backdrop on the back of rising interest rates and improving domestic economy should help the banking industry thrive in the upcoming quarters. While increasing signals of political uncertainty are anticipated, one might take the advantage of the driving forces by betting on a few fundamentally strong bank stocks.
Sterling Bancorp STL is one such stock, carrying Zacks Rank #2 (Buy). The stock has missed the Zacks Consensus Estimate in just one of the trailing four quarters. Moreover, the estimates for 2017 and 2018 have remained stable at $1.39 and $1.70, respectively, over the past seven days.
The stock gained around 26.4% in a year, outperforming the 17.9% growth recorded by the industry it belongs to.
Here are some other aspects that make Sterling an attractive investment option:
Organic Growth: Sterling continues to make steady progress toward improving its top line. Sales witnessed a 36% compounded annual growth rate (CAGR) over the last three years (2014-2016). Also, the top line is expected to grow 41.3% in 2017, much higher than the industry’s flat trend. Further, in 2018, it is expected to grow 68.4%.
Earnings Growth: While Sterling’s historical earnings per share (EPS) growth rate of 17.7% compares with the industry average of 8.45%, investors should really focus on its projected EPS growth (F1/F0). Here, the company is looking to grow at a rate of 25.2%, substantially higher than the industry average of 10.9%.
Stock is Undervalued: Sterling has P/E and P/B ratios of 16.22x and 1.58x compared with the S&P 500 average of 18.86x and 3.07x, respectively. Based on these ratios, the stock seems undervalued.
Superior Return on Equity: Sterling has a return on equity of 8.62% compared with the industry average of 8.57%. This indicates that the company reinvests more efficiently than its peers.
Other Stocks Worth a Look
Some other stocks worth considering in the same industry are First Internet Bancorp INBK, First Connecticut Bancorp, Inc. FBNK and CNB Financial Corporation CCNE, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
First Internet Bancorp has witnessed an upward earnings estimate revision of 8.6% for the current year, over 60 days. Also, in a year’s time, its share price has jumped 34.4%.
First Connecticut’s Zacks Consensus Estimate for the current-year earnings has been revised 2.3% upward, in the last 60 days. Also, its share price has increased 39.4% in the trailing 12 months.
CNB Financial has witnessed an upward earnings estimate revision of 6.7% for the current year, in the last 60 days. Also, its share price has seen a 23% rise in a year.
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Sterling Bancorp (STL) : Free Stock Analysis Report
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