Based on strong fundamentals and impressive growth prospects, Zions Bancorporation, National Association ZION seems to be an attractive investment option. Higher interest rates, loan growth, improving credit quality and restructuring initiatives position the company well for growth. Exemption from stringent regulations and the removal of SIFI label are major positives for the bank.
The company’s Zacks Consensus Estimate for earnings has moved 3.3% upward for 2019 and 1.7% higher for 2020 over the past 60 days. The stock currently carries a Zacks Rank #2 (Buy).
Notably, its shares have rallied 23.1% so far this year, outperforming the S&P 500 Index’s rise of 11.1%.
Why Zions is a Solid Pick
Earnings growth: Zions recorded 21.5% earnings growth over the past three-five years. This earnings momentum is likely to continue in the near term as well, as reflected by the company’s projected EPS growth rate of 8.8% and 8.4% for 2019 and 2020, respectively.
Moreover, Zions has an impressive earnings surprise history. Its earnings surpassed the consensus estimate in three of the trailing four quarters, the average beat being 9.6%.
Also, the company’s long-term (three-five years) estimated EPS growth rate of 8.1% promises rewards for investors.
Revenue strength: Zions’ revenues witnessed a CAGR of 6.4% in the last five years (2014-2018), driven by growth in loans and rise in interest rates. With favorable macroeconomic developments and continued rise in the demand for loans, the bank is likely to witness further increase in revenues. The company’s projected sales growth of 4.9% for 2019 and 3.2% for 2020 ensures continuation of the upward trend.
Strong leverage: Zions’ debt/equity ratio is 0.10 versus the industry average of 0.17, indicating a relatively lower debt burden. It also indicates the company’s financial stability amid adverse economic conditions.
Stock seems undervalued: With respect to the price-to-book (P/B) and PEG ratios, Zions looks undervalued. The company’s P/B ratio of 1.40 is below the industry average of 1.53. Also, the PEG ratio of the company is 1.43 compared with the industry average of 1.57.
Additionally, Zions has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and to identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Favorable VGM Score: Zions has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Other Stocks Worth a Look
Other stocks in the banking space worth a look include Western Alliance Bancorporation WAL, First Hawaiian, Inc. FHB and Bank of Marin Bancorp BMRC, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Western Alliance’s earnings estimates for the current year have been revised 1.7% upward over the past 30 days. Also, its shares have gained 16% year to date.
First Hawaiian, Inc.’s earnings estimates for the current year have been revised 1.9% upward over the past 30 days. Its shares have rallied 18% so far this year.
Bank of Marin Bancorp’s earnings estimates for 2018 have moved up 3.6% over the past 30 days. Its share price has rallied 7.4% year to date.
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Zions Bancorporation (ZION) : Free Stock Analysis Report
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