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BOK Financial Struggles With Rising Costs: Time to Sell?

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BOK Financial Corporation BOKF continues to face challenges from an increasing expense base. Also, its capital-deployment activities seem unsustainable. However, the company’s inorganic growth strategies are anticipated to yield positive results.

Moreover, the Zacks Consensus Estimate for current-year earnings has moved 1% downward over the past 30 days. It currently carries a Zacks Rank #4 (Sell).

Shares of BOK Financial have lost 32.5% in a year’s time compared with a 16.3% decline of the industry it belongs to.

 

 

The company faces operational risks from escalating costs. Operating expenses saw a CAGR of 7.1% over the last five years (ended 2019). Such a consistent rise in expenses despite its focus on expense management is likely to deter bottom-line growth.

Though BOK Financial has been announcing dividend hikes every year, its debt/equity ratio seems unfavorable compared with the broader industry. Further, the company’s performance in the past few quarters has been quite fluctuating. Hence, we believe that its capital-deployment activities might not be sustainable.

Also, changing conditions of the global financial markets and general economic conditions could affect BOK Financial’s businesses. Notably, brokerage and trading revenues, which constitute a major source of other operating revenues, are exposed to risks as it depends on the volume of transactions, which might affect earnings in the coming quarters.

However, BOK Financial has significantly bolstered its growth prospects over the years through acquisitions. The company strengthened its foothold in Colorado and Arizona by completing the merger with Denver-based CoBiz Financial in 2018. Moreover, its involvement in such inorganic growth activities reflects its strong capital position.

Stocks to Consider

Merchants Bancorp’s MBIN current-year earnings estimates moved north in 60 days. Additionally, the stock has depreciated 4% over the past six months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

New York Community Bancorp’s NYCB ongoing-year earnings estimates have moved up in the past 60 days. Further, the company’s shares have declined 14.8% over the past six months. At present, it carries a Zacks Rank of 2.

West Bancorporation’s WTBA ongoing-year earnings estimates have moved up in the past 60 days. Further, the company’s shares have declined 26.6% over the past six months. At present, it sports a Zacks Rank of 1.

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This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

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BOK Financial Corporation (BOKF) : Free Stock Analysis Report
 
New York Community Bancorp, Inc. (NYCB) : Free Stock Analysis Report
 
West Bancorporation (WTBA) : Free Stock Analysis Report
 
Merchants Bancorp (MBIN) : Free Stock Analysis Report
 
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Zacks Investment Research