It seems wise to add Hancock Whitney Corporation HWC stock to your portfolio now, given its solid liquidity position, continued rise in loan and deposit balances, and initiatives to enhance revenues. Also, the bank’s inorganic growth strategy will support profitability.
The Zacks Consensus Estimate has remained stable for 2019 and moved nearly 1% upward for 2020 over the past 30 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Hancock’s price performance also looks encouraging. Its shares have rallied 14.8% so far this year, outperforming the industry’s rise of 12.6%.
What Makes Hancock Whitney Stock a Solid Bet
Earnings strength: Hancock Whitney’s earnings have grown at the rate of 15.2% over the past three to five years. With favorable operating backdrop, the momentum is expected to continue in the near term.
Additionally, in April, Hancock Whitney inked a deal to acquire MidSouth Bancorp, Inc. MSL in an all-stock deal. Excluding merger-related costs, it will be accretive to the company’s earnings by 13-15 cents, starting first-quarter 2020.
The company’s earnings are expected to grow 1.8% and 7.8% in 2019 and 2020, respectively.
Further, the company’s long-term (three-five years) estimated earnings growth rate of 8% ensures reward for shareholders.
Revenue growth: Supported by rising loan balances and various strategic initiatives to enhance revenues, Hancock Whitney’s net revenues (on tax equivalent basis) witnessed CAGR of 6.5% over the past five years (2014-2018). Strategic investments in growth markets are expected to be accretive to earnings and will bolster the bank’s presence in such areas.
The company’s projected sales growth rate of 5.6% and 3.8% for 2019 and 2020, respectively, indicates continued upward momentum in revenues.
Solid capital deployment actions: Hancock Whitney’s capital deployment plans are impressive. Last year, the bank had hiked quarterly dividend by 12.5%. Notably, the company expects to maintain dividend payout ratio between 30% and 40% of net income. Also, it is expected to continue with opportunistic share repurchases. Given a solid liquidity position and a debt/equity ratio lower than the industry, the company will be able to sustain the current level of capital deployment actions in the future.
Strong leverage: Hancock Whitney’s debt/equity ratio is 0.11 compared with the industry average of 0.21. The relatively strong financial health of the company should help it perform better than its peers amid a dynamic business environment.
Superior Return on Equity (ROE): Hancock Whitney’s trailing 12-month ROE reflects its superiority in terms of utilizing shareholder funds compared with its peers. The company has an ROE of 11.65%, higher than the industry average of 9.93%.
Stock looks undervalued: Hancock Whitney’s looks undervalued when compared with the broader industry. Its current price/earnings (F1) and price/book ratios are below the respective industry averages.
The stock currently 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 identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Stocks Worth Considering
First Horizon National Corporation FHN haswitnessed a marginal upward revision in its Zacks Consensus Estimate for 2019, over the past 60 days. Its shares have gained12.4% over the past six months. Currently, the stock carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, Hilltop Holdings Inc.’s HTH earnings estimates for the current year have been revised 11.5% upward. Over the past six months, shares of this Zacks Rank #2 company have rallied 20.8%.
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MidSouth Bancorp (MSL) : Free Stock Analysis Report
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