CWCO vs. GWRS: Which Stock Should Value Investors Buy Now?
An improving operating backdrop, a rising-rate environment and easing of regulations, along with the strengthening of the domestic economy, should keep aiding banking stocks. So, we bring one such stock — Fidelity Southern Corporation LION — which, based on its strong fundamentals and improving prospects, is a good investment option right now.
The company’s Zacks Consensus Estimate for current-year earnings has been revised 3.1% upward over the last 60 days, reflecting analysts’ optimism regarding its earnings growth potential. As a result, the stock currently carries a Zacks Rank #2 (Buy).
Further, the company’s price performance seems impressive. Its shares have rallied 17.7% so far this year, outperforming 5.6% growth of the industry.
Fidelity Southern has other factors that make it an attractive pick right now.
Revenue Strength: Fidelity Southern’s revenues have witnessed a CAGR of 10.9% over the past five years (2013-2017). Also, its projected sales growth of 3.5% for 2018 and 4.3% for 2019 ensure the continuation of the uptrend in revenues.
Earnings per Share (EPS) Growth: Fidelity Southern witnessed earnings growth of 6% in the past three to five years. This earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth rate of 27.5% for 2018 and 9% for 2019.
Superior Return on Equity (ROE): Fidelity Southern has an ROE of 9.15%, higher than the industry average of 8.80%. This shows that the company reinvests its cash more efficiently.
Valuation Looks Reasonable: Fidelity Southern looks undervalued, with respect to its Price-to-Cash Flow (P/CF) and Price-to-Sales (P/S) ratios. The company has a P/CF ratio of 12.0 compared with the industry average of 16.7. Also, the bank’s P/S ratio of 2.4 is below the industry average of 3.9. In addition, Fidelity Southern has a Value Score of A. Our research shows that stocks with a Value 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 top-ranked stocks in the same industry include Capstar Financial Holdings, Inc. CSTR, Community Trust Bancorp, Inc. CTBI and First BanCorp. FBP.
Over the past 60 days, Capstar Financial has witnessed an upward earnings estimate revision of 2.7% for the current year. Over the past year, its share price has risen 2.1%. The stock currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, Community Trust Bancorp’s earnings estimates have been revised 2.7% upward for the current year. Additionally, its share price has increased 14.6% over the last 12 months. It currently carries a Zacks Rank of 2.
Over the past 60 days, First BanCorp also has a Zacks Rank #2. Its earnings estimates for 2018 have been revised 11.8% upward. Shares of the company have rallied 33% in a year’s time.
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Community Trust Bancorp, Inc. (CTBI) : Free Stock Analysis Report
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Capstar Financial Holdings Inc. (CSTR) : Free Stock Analysis Report
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