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6 Reasons That Make Meta Financial (CASH) Stock a Solid Pick

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Zacks Equity Research
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It seems to be a wise idea to add Meta Financial Group, Inc. CASH stock to your portfolio now, given its strong fundamentals and promising prospects. Further, rising loans and deposits are likely to continue supporting the company’s profitability.

The stock has been witnessing upward estimate revisions, reflecting analysts’ optimism about its earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for fiscal 2020 and fiscal 2021 has moved 1.2% and 1.5% north, respectively.

The Zacks Rank #2 (Buy) stock has appreciated 77.8% over the past year, significantly outperforming the industry’s growth of 16.8%.

Here are a few factors that make Meta Financial an attractive investment option.

Revenue growth: Organic growth is a key strength for Meta Financial. The top line witnessed a fiscal five-year compound annual growth rate of 46.3% (2015-2019). Robust growth in loan and deposit balances is likely to continue supporting revenues.  

Moreover, in 2018, the company had acquired Crestmark Bancorp, Inc., which expanded its presence in the commercial lending industry, thus boosting revenues. Further, the company’s projected sales growth rate of 5.2% and 7.3% for fiscal 2020 and fiscal 2021, respectively, indicates continuation of the momentum.

Earnings strength: Over the past three to five years, earnings of Meta Financial witnessed 26% growth, significantly above the industry average of 13.5%. Further, the company’s earnings are projected to be up 29.3% and 16.1% in fiscal 2020 and fiscal 2021, respectively.

Also, Meta Financial has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 15.7%.

Steady capital deployment: Meta Financial is actively involved in capital deployment activities. Since 2007, the company has been paying dividends consistently. Also, in March 2019, it announced a plan to buy back shares up to 2 million, expiring in September 2021. As of Sep 30, 2019, nearly 0.3 million shares were left to be repurchased. Driven by a strong liquidity position and consistently improving earnings, the capital deployment activities look sustainable.

Strong leverage: Meta Financial’s debt/equity ratio is 0.26 compared with the industry’s average of 0.59. This reflects that the company will be financially stable, even during adverse economic situations.

Superior Return on Equity (ROE): Meta Financial’s ROE of 12.70% compares favorably with the industry average of 8.87%. This highlights the company’s commendable position over its peers in using shareholders’ funds.

Stock seems undervalued: The company looks undervalued, with respect to its price/earnings (P/E) (F1) and price/cash flow (P/CF) ratios. It has a P/E (F1) ratio of 10.49, which is below the industry average of 13.57. Also, its P/CF ratio of 8.60 is lower than the industry average of 12.58.

Other Key Picks

Northfield Bancorp, Inc. NFBK has witnessed 1.2% upward earnings estimate revision for 2020 in the past 60 days. Moreover, this Zacks #1 (Strong Buy) Ranked stock has gained 19.2% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors Bancorp, Inc.’s ISBC current-year earnings estimates have moved 7.1% north in the past 60 days. Further, the company’s shares have gained 3.8% over the past year. At present, it flaunts a Zacks Rank of 1.

OceanFirst Financial Corp.’s OCFC 2020 earnings estimates have been revised marginally upward in the past 60 days. Moreover, this Zacks #2 Ranked stock has gained 8% over the past year.

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Meta Financial Group, Inc. (CASH) : Free Stock Analysis Report
Northfield Bancorp, Inc. (NFBK) : Free Stock Analysis Report
OceanFirst Financial Corp. (OCFC) : Free Stock Analysis Report
Investors Bancorp, Inc. (ISBC) : Free Stock Analysis Report
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