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4 Reasons Why First Financial (FFIN) is an Attractive Pick

Zacks Equity Research

It seems to be a wise idea to invest in First Financial Bankshares FFIN stock now. The company is well poised for revenue growth, driven by continued improvement in loans and deposits. Moreover, it has a solid balance sheet position.

Further, the company has been witnessing upward earnings estimate revisions of late, indicating that analysts are optimistic regarding its earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised marginally upward over the past 60 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).

Moreover, at a time when broader markets are bearish, the stock has been performing well. Over the past year, shares of First Financial have rallied 27.3% against a decline of 9.9% recorded by the industry it belongs to.

Here are a few other factors that make First Financial an attractive pick right now:

Revenue Strength: First Financial has been witnessing consistent improvement in revenues, driven by growth in loans and deposit balances. Over the last six years (ended 2018), total revenues recorded a compound annual growth rate (CAGR) of 10.6%.

Moreover, backed by strong balance sheet and liquidity positions, the company is expected to be able to undertake inorganic expansion moves. In January 2018, First Financial acquired Commercial State Bank, which helped boost its non-interest revenues.

Notably, the company’s revenues are projected to grow 5.6% in 2019 and 5.5% in 2020.

Earnings Growth: First Financial recorded earnings per share (EPS) growth of 9% over the last three to five years. In fact, this earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth rate of 9.6% and 5.4% for 2019 and 2020, respectively.

Superior Return on Equity (ROE): First Financial has an ROE of 14.74% compared with the industry average of 10.10%. This reflects the company’s superiority in utilizing shareholders’ funds.

Strong Leverage: First Financial’s debt/equity ratio is nil compared with the industry average of 0.47. The relatively strong financial health of the company will likely help it perform better than its peers under a dynamic business environment.

Other Key Picks

Some other top-ranked stocks in the finance space are Federated Investors, Inc. FII, Ares Management ARES and Affiliated Managers Group, Inc. AMG.

Federated Investors currently sports a Zacks Rank #1 (Strong Buy). It has witnessed an upward earnings estimate revision of nearly 4.3% for the current year, over the past 60 days. Its shares have gained 17.1% over the past three months.

The Zacks Consensus Estimate for earnings for Ares Management has increased 6.2% over the past 60 days. Its shares have gained 27.7% over the past three months. The stock currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Affiliated Managers’ earnings estimates for the current year have been revised upward by 1% over the past 60 days. Its shares have gained 11.3% over the past three months. The stock presently has a Zacks Rank #2.

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First Financial Bankshares, Inc. (FFIN) : Free Stock Analysis Report
Affiliated Managers Group, Inc. (AMG) : Free Stock Analysis Report
Federated Investors, Inc. (FII) : Free Stock Analysis Report
Ares Management L.P. (ARES) : Free Stock Analysis Report
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