Citizens Financial Group, Inc. CFG is on track to ramp up its profitability with fresh “Tapping Our Potential (TOP) program” objectives. Further, its strong capital position, reflected by involvement in inorganic growth strategies and steady capital deployment activities, will support growth.
Also, the company’s Zacks Consensus Estimate for current-year earnings have been revised 13.7% upward over the past 60 days. Currently, the stock carries a Zacks Rank #2 (Buy).
Citizens Financial’s shares have gained 71.2% in the past six months compared with the industry’s growth of 20.5%.
Why the Stock is Worth Buying
Impressive Initiatives: Citizens Financial’s TOP program focuses on improving its financials and revamping profitability. The company expects to achieve a pre-tax benefit of $300-$325 million by 2021 from its TOP 6 Program. It plans to continue driving efficiency improvement, and fund additional growth and innovation investments with the help of these initiatives.
Revenue Strength: Citizens Financial continues to witness top-line improvement. Since 2015, the company recorded a continued rise in its sales, witnessing five-year compound annual growth rate (CAGR) (ended 2019) of nearly 11.2%.
The company’s projected sales growth (F1/F0) of 4.16% (against the nil industry average) indicates constant upward momentum in revenues.
Earnings per Share Strength: Over the past three to five years, Citizens Financial witnessed earnings per share (EPS) growth of 21.2% compared with 12.5% for the industry. The company delivered an average positive earnings surprise of 109.78% over the trailing four quarters.
Also, the company’s long-term (three to five years) estimated EPS growth rate of 5.7% promises rewards for investors over the long run.
Steady Capital-Deployment Activities: The company remains committed to enhancing shareholder value. It has been raising the quarterly common stock dividend every year since 2016, with the last hike announced in January. Also, it has a share buyback program in place, which is temporarily suspended due to the coronavirus pandemic.
Strong Leverage: The company’s debt/equity ratio is 0.45, lower than the industry’s average debt/equity ratio of 0.57. This reflects that the company will be financially stable even during adverse economic situations.
Reasonable Valuation: The stock looks undervalued right now when compared with its broader industry. It currently has a price-to-book ratio of 0.57, marginally lower than the industry average of 0.77. Also, its price-to-cash flow ratio of 4.84 is below the industry’s 8.2.
Moreover, the stock has a Value Score of A. The Value Style Score condenses all valuation metrics into one actionable score, which helps investors steer clear of 'value traps' and identify stocks that are truly trading at a discount.
Other Stocks to Consider
Old Second Bancorp OSBC has witnessed upward earnings estimate revisions for 2020 over the past 60 days. Also, this Zacks #2 Ranked (Buy) stock has gained 32.8% over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Independent Bank Corporation IBCP ongoing-year earnings estimates have moved up in the past 60 days. Further, the company’s shares have gained 25.7% over the past six months. At present, it carries a Zacks Rank of 2.
Popular BPOP current-year earnings estimates have moved north in 60 days’ time. Additionally, the stock has jumped 43.6% over the past six months. It currently carries a Zacks Rank #2.
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