4 Reasons Why Cullen/Frost (CFR) Stock is Worth Buying Now
Cullen/Frost Bankers Inc CFR is well positioned for growth, backed by its robust balance sheet, and improving loans and deposit balances despite concerns related to costs. Further, the company’s solid capital deployments seem sustainable.
In addition, analysts are bullish on the stock’s earnings growth prospects. Over the past 30 days, the Zacks Consensus Estimate for earnings has moved 2.2% and 2.7% northward for 2022 and 2023, respectively. Cullen/Frost currently sports a Zacks Rank #1 (Strong Buy).
Shares of the company have surged 31.9% over the past year, outperforming the industry’s growth of 8.6%.
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Mentioned below are a few other factors that make CFR an attractive investment option now.
Earnings Growth: The company has witnessed earnings per share growth of 0.31% in the past three to five years. While the company’s earnings are projected to decline 4.7% in 2022, the trend can reverse after that. In 2023, the company’s earnings are projected to witness growth of 18.5%.
Moreover, Cullen/Frost has an impressive earnings surprise history. The company's earnings have surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 15.2%.
Revenue Strength: Cullen/Frost’s organic growth looks impressive. The company’s revenues have witnessed a compound annual growth rate (CAGR) of 16.4% in the last four years (2018-2021). Further, net interest income, on a tax-equivalent basis (excluding Paycheck Protection Program or PPP), is expected to grow in the mid-teens range in 2022.
Cullen/Frost is undertaking efforts to expand in the Texas market. With a developed infrastructure, it continues to explore opportunities in the Houston region and has planned a 28-branch expansion in Dallas. CFR plans to triple its size in Dallas by 2024. These strategies are expected to further support the company’s top-line growth in the quarters ahead.
Cullen/Frost’s 2022 revenues are projected to grow by 4.6%, whereas 2023 revenues are expected to rise by 11.2%.
Steady Capital Deployments: Cullen/Frost’s capital-deployment activities look sustainable. In July 2021, the company announced a 4% increase in quarterly stock dividend following annual hikes for 27 consecutive years. Further, in January 2022, the company’s board of directors approved a common stock- repurchase program worth $100 million for a one-year period.
Strong Leverage: The company’s debt-to-equity ratio of 0.05 compares favorably with that of the industry’s 0.11. It highlights the financial stability of the company even amid adverse economic conditions.
Other Stocks Worth Considering
A couple of other stocks from the finance space worth a look are Morgan Stanley MS and First Business Financial Services FBIZ. Morgan Stanley carries a Zacks Rank #2 (Buy) while FBIZ sports a Zacks Rank #1. You can check out the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Morgan Stanley’s current-year earnings has been revised 4.2% upward over the past 60 days.
MS’s shares have risen 7.7% in the past year.
First Business recorded an upward earnings estimate revision of 9% for 2022 over the past 60 days.
The FBIZ stock has jumped 41.4% in the past year.
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