Western Alliance Bancorporation WAL appears to be a solid bet now, backed by its organic growth strategies, which have placed it well for the future. Further, improving earnings performance and a strong capital and liquidity profile are likely to support its profitability.
Further, analysts seem to be optimistic about the company’s prospects as the stock is witnessing upward estimate revisions. Over the past 90 days, the Zacks Consensus Estimate for the current year has risen slightly to $4.06. Backed by these upward estimate revisions, the company currently carries a Zacks Rank #2 (Buy).
However, the company’s price performance does not seem impressive. Its shares have lost 31.6% in the past six months compared with the industry’s decline of 28.6%. Nevertheless, given the upward estimate revisions and a solid Zacks Rank, the stock is expected to gain in the future.
Why the Stock is an Attractive Choice
Earnings Strength: Western Alliance has recorded an earnings growth rate of 25.8% over the last three to five years compared with the industry average of 13.1%. Continuing with the earnings momentum, the earnings growth rate for the current year is expected to be 31%.
Further, the company’s long-term (three to five years) estimated earnings growth rate of 11.3% promises rewards for investors in the long run.
Revenue Growth: The company continues to make steady progress toward improving its top line. Its revenues recorded a five-year (ended 2017) CAGR of around 23%. Further, its projected revenue growth (F1/F0) of 16.2% (against the industry average of about nearly 4%) indicates consistent upward momentum in revenues.
Impressive Balance Sheet Growth: The company’s loans and deposits have witnessed a CAGR of 22.1% and 21.3%, respectively, over a five-year period (ended 2017). Thus, a strong balance sheet position enables Western Alliance to undertake any opportunistic expansion.
Superior Return on Equity: Western Alliance has a return on equity of 17.27% compared with the industry average of 11.44%. This indicates that the company reinvests more efficiently compared to its peers.
Strong Leverage: The company’s debt/equity ratio is valued at 0.14 compared to the industry’s average of 0.18. The relatively strong financial health of the company will help it perform better in an unstable economic environment compared with its peers.
Stock Looks Undervalued: Western Alliance’s P/E and P/CF ratios are 9.26 and 11.17 compared to the industry average of 10.57 and 11.79, respectively. Also, the stock has a Value Score of B. Based on these ratios, the stock seems undervalued. 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 to Consider
The Zacks Consensus Estimate for People's Utah Bancorp’s PUB earnings for 2018 has remained stable in the past 60 days. Also, its share price has increased 7% in the past 24 months. The stock carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amalgamated Bank AMAL currently carries a Zacks Rank of 2. The stock’s 2018 earnings estimates have been revised 2.2% upward in the past 60 days. Further, the company’s shares have gained 6.5% in two years’ time.
The Zacks Consensus Estimate for Equity Bancshares’ EQBK earnings for the current year has been revised 2.1% upward over the past 60 days. Moreover, in the past two years, its shares have gained 6.9%. Also, it carries a Zacks Rank of 2.
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Western Alliance Bancorporation (WAL) : Free Stock Analysis Report
People's Utah Bancorp (PUB) : Free Stock Analysis Report
Amalgamated Bank (AMAL) : Free Stock Analysis Report
Equity Bancshares, Inc. (EQBK) : Free Stock Analysis Report
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