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Here's Why You Should Hold on to KeyCorp (KEY) Stock for Now

Zacks Equity Research

KeyCorp’s KEY shares have gained 47.2% in the past 12 months, outperforming the 34.2% rally for the industry it belongs to. Improving rate scenario and robust loans and deposit growth position the stock well for further growth. Also, given its solid capital position, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.

However, the company’s significant exposure to risky loan portfolios might curb its growth in the near term.

Also, KeyCorp’s Zacks Consensus Estimate for the current-year earnings has been revised marginally downward over the last 30 days. Thus, the stock currently carries only a Zacks Rank #3 (Hold).

Going by the fundamentals, the company witnessed its revenues increasing at a five-year (2012–2016) CAGR of 5.1%. Moreover, continued rise in loans and deposits along with lesser regulations are expected to continue supporting top-line growth in the quarters ahead.

Also, the company is well poised to benefit from the gradual improvement in the rate scenario. Notably, subsequent to the latest Fed rate hike, the company raised its prime lending rate from 4% to 4.25%.

Further, the company’s efforts toward streamlining operations, consolidating branches and diversifying products should help in reducing expenses, thereby supporting bottom-line growth in the quarters ahead.

However, the company continues to have significant exposure to home equity and commercial real estate loans. Despite some improvement in the housing sector, it is likely to pose some risks for the company in the near term.

Some better-ranked stocks in the finance space are Carolina Financial Corporation CARO, Raymond James Financial, Inc. RJF and Comerica Incorporated CMA.

Carolina Financial witnessed an upward earnings estimate revision of 4.5% for the current year, over the last 30 days. Its share price has increased 60.5% in the last 12 months. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Raymond James Financial’s earnings estimates for the current fiscal year have remained stable over the past 30 days. Its shares have gained 42.1% in the last 12 months. It carries a Zacks Rank #2 (Buy).

Comerica also carries a Zacks Rank #2. The company witnessed an upward earnings estimate revision of 3.7% for the current year, over the last 30 days. Its share price has increased 56% in a year’s time.

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Comerica Incorporated (CMA) : Free Stock Analysis Report
KeyCorp (KEY) : Free Stock Analysis Report
Carolina Financial Corporation (CARO) : Free Stock Analysis Report
Raymond James Financial, Inc. (RJF) : Free Stock Analysis Report
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