Has Telephone and Data Systems (TDS) Outpaced Other Utilities Stocks This Year?
With the earnings season for finance sector stocks drawing to a close, this is the right time to go through the reasons for the impressive quarterly performance. Also, going forward, improving economy, higher interest rates and rise in demand for loans are expected to support the stocks’ financials.
Therefore, this a good time to add a few banking stocks in your portfolio. Today, we bring one such stock — SVB Financial Group SIVB — that continues to depict strong fundamentals and improving prospects.
The stock has witnessed upward estimate revisions. The Zacks Consensus Estimate has moved 13.8% and 17.8% upward for 2018 and 2019, respectively, over the last 30 days. Also, this Zacks Rank #1 (Strong Buy) stock has jumped 36.5% year to date, significantly outperforming the industry’s rally of 11.2%.
Here are the reasons why SVB Financial stock is expected to continue performing well:
Earnings growth: SVB Financial witnessed approximately 18.6% rise in earnings per share in the last three-five years. This earnings momentum will likely continue in the near term, as reflected by the company’s projected earnings growth of 60.5% for 2018 and 20.8% for 2019.
Also, SVB Financial has an impressive earnings surprise history. The bank has an average positive earnings surprise of 15.5% for the trailing four quarters.
Further, the company’s long-term (three-five years) estimated EPS growth rate of 11.0% (versus the industry growth rate of 9.6%) promises rewards for investors in the long run.
Moreover, the stock has a Growth Score of B. Our research shows that stocks with a Growth Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential. Hence, the stock look promising at present.
Revenue strength: SVB Financial’s net revenues have seen a compounded annual growth rate of 9.6% over the last five years (2013-2017). The top-line improvement was backed by strong loan and deposit growth. Further, focus on non-interest income and easing margin pressure will continue supporting revenues.
The company’s projected sales growth of 25.9% and 17% for 2018 and 2019 ensures continuation of the upward revenue trend.
Global expansion strategy: SVB Financial is making efforts to expand globally. While the company’s U.K. and Asia operations seem to be growing, its Canadian and German applications remain priorities. The company expects to start operations in both countries by mid-2018, subject to regulatory approvals. These initiatives are expected to boost the company’s profitability.
Superior ROE: SVB Financial’s return on equity ratio is 14.53% compared with industry average of 10.73%. This indicates that the company reinvests more efficiently compared to the industry.
Other Stocks Worth a Look
First Financial Northwest, Inc. FFNW has witnessed upward earnings estimate revision of 15% over the past 30 days. Also, its share price is up 13.7% so far this year. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Northrim BanCorp Inc.’s NRIM earnings estimates have been revised 13.3% upward over the past 30 days. The Zacks Rank #1 stock is up 8.9% year to date.
People's Utah Bancorp PUB, with a Zacks Rank #2, has witnessed an upward earnings estimate revision of 1.5% over the past month. So far this year, its share price has increased 8.6%.
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SVB Financial Group (SIVB) : Free Stock Analysis Report
Northrim BanCorp Inc (NRIM) : Free Stock Analysis Report
First Financial Northwest, Inc. (FFNW) : Free Stock Analysis Report
People's Utah Bancorp (PUB) : Free Stock Analysis Report
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