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Is it Advisable to Add Fifth Third (FITB) to Your Portfolio?

Zacks Equity Research

Improving operating backdrop, rising rate environment, anticipated tax benefit from the U.S. tax reform and the strengthening domestic economy are projected to continue supporting banking stocks. Keeping this in mind, we have selected Fifth Third Bancorp FITB for your portfolio.

It’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio, at the current level. Fifth Third is one such stock that has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 30 days, the Zacks Consensus Estimate for 2017 and 2018 jumped 5.5% and 3%, respectively.

Further, shares of this Zacks Rank #2 (Buy) company have gained around 16.6% in six months’ time, outperforming 12.6% growth recorded by the industry.

Fifth Third has a number of other aspects that make it an attractive investment option.

Why Fifth Third is a Must Buy

Organic Growth: Fifth Third’s diverse revenue base will likely support its earnings growth. The company has expanded its non-interest income base, which now represents over 48% of total revenues in the first nine months of 2017. Furthermore, management expects fee income to increase in the near term.  Additionally, the company remains focused on executing measures, including branch consolidation.

Earnings Strength: Fifth Third recorded earnings growth rate of 2.1% over the last three to five years. Also, earnings are expected to display an upswing in the near term, as the company’s projected EPS growth (3-5 years) is 6.7%. Also, Fifth Third recorded an average positive earnings surprise of 5.29%, over the trailing four quarters.

Stock is Undervalued: Fifth Third has P/E and P/B ratios of 14.9 and 1.44 compared to the S&P 500 average of 19.11 and 3.4, respectively. Based on these ratios, the stock seems undervalued.

Other Stocks to Consider

Legg Mason Inc. LM has been witnessing upward estimate revisions for the past seven days. Also, the company’s shares have returned nearly 6.7% over the past six months. It flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Federated Investors Inc. FII has been witnessing upward estimate revisions for the last 60 days. The company’s shares have appreciated 23.5% in six months. It carries a Zacks Rank of 2.

Artisan Partners Asset Management Inc. APAM has been witnessing upward estimate revisions for the past two months. Additionally, the stock has rallied more than 25% in six months. It currently carries a Zacks Rank of 2.

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Fifth Third Bancorp (FITB) : Free Stock Analysis Report
Legg Mason, Inc. (LM) : Free Stock Analysis Report
Federated Investors, Inc. (FII) : Free Stock Analysis Report
Artisan Partners Asset Management Inc. (APAM) : Free Stock Analysis Report
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