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It seems to be a wise idea to add East West Bancorp, Inc. EWBC stock to your portfolio now. Supported by decent growth in loans and deposit balances, the company remains on track for organic growth. Also, its efficient capital deployments indicate a solid balance sheet and liquidity position.
Moreover, analysts seem to be optimistic regarding the company’s earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 11.1% upward over the past 30 days. Thus, East West Bancorp currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, shares of the company have gained 53.9% so far this year compared with 39.5% growth recorded by the industry.
Let’s check some of the other factors that make the stock an attractive pick right now.
Earnings Growth: East West Bancorp witnessed earnings growth of 11.1% in the past three to five years, higher than the industry average of 10.2%. The upward momentum is likely to continue in the near term as reflected by the company’s projected earnings growth rate of 41.3% for 2021, higher than the industry’s 22.2%.
Further, its long-term (three to five years) estimated earnings growth rate of 10% promises rewards for investors.
Revenue Strength: The company’s organic growth trajectory looks impressive. While net interest income, which is the primary source of its revenues, declined in 2020 and the first quarter of 2021; the same witnessed a compound annual growth rate (CAGR) of 5.1% over the last four years (2017-2020). Continued growth in loans is expected to further support the top line in the near term. Over the last three years (2018-2020), total loans witnessed a CAGR of 8.5%.
Efficient Capital Deployments: East West Bancorp’s capital deployment activities seem impressive. In January 2021, the company hiked its quarterly dividend by 20%. This followed a 20% hike in April 2019, 15% in July 2018 and 11.1% in January 2015.
Also, the company has a share-repurchase plan in place, under which it had authorized the repurchase of up to $500 million worth of shares in March 2020. As of Mar 31, 2021, $354.1 million worth of shares were left to be repurchased. Given a solid capital position and earnings strength, the company’s capital deployment plan looks sustainable.
Superior Return on Equity (ROE): East West Bancorp has an ROE of 12.15%, higher than the industry average of 10.30%. This shows that the company reinvests its cash more efficiently compared with peers.
Other Stocks Worth Considering
A few other top-ranked stocks from the same space are mentioned below.
SVB Financial Group’s SIVB Zacks Consensus Estimate for current-year earnings has been revised 32.5% upward over the past 60 days. Its shares have gained 66.5% over the past six months. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
First Republic Bank’s FRC earnings estimates for the current year have been revised 7.1% upward over the past 60 days. The Zacks Ranked #2 stock has gained 41.8% over the past six months.
Washington Federal, Inc.’s WAFD earnings estimates for the current fiscal year have moved up 7.7% over the past 60 days. Its share price has rallied 36.7% over the past six months. It currently carries a Zacks Rank of 2.
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First Republic Bank (FRC) : Free Stock Analysis Report
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