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Cullen/Frost Bankers Inc CFR is well positioned for growth, backed by its robust balance sheet, and improving loans and deposit balance despite concerns related to mounting costs. Further, the company’s solid capital deployments seem sustainable.
In addition, analysts are bullish on the stock’s prospects. Over the past 30 days, the Zacks Consensus Estimate for earnings has moved 15.4% and 5.5% north for 2021 and 2022, respectively. Thus, Cullen/Frost flaunts a Zacks Rank of 1 (Strong Buy), at present.
Shares of the company have surged 43% over the past six months, outperforming the industry’s rally of 40.2%.
Mentioned below are some major factors that make Cullen/Frost stock an attractive pick now.
Earnings Growth: The company has witnessed an earnings per share growth rate of 1.3% in the past three to five years. Furthermore, its earnings are projected to jump 21.8% in 2021. Besides, the company's earnings are anticipated to grow at a rate of 9.5% over the long term compared with the industry’s average of 9.2%.
Moreover, Cullen/Frost has an impressive earnings surprise history. The company's earnings have surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 40.97%.
Revenue Strength: Cullen/Frost’s organic growth looks impressive. The company’s revenues have witnessed a compound annual growth rate (CAGR) of 6.4% in the last five years (2016-2020), largely driven by rising loans and deposits balance.
Solid Balance Sheet Position: As of Mar 31, 2021, the bank had a total debt of $2.16 billion, and cash worth $536 million. Apart from this, Cullen/Frost’s times interest earned of 43.5 as of first quarter 2021, has improved sequentially. Moreover, its debt to capital ratio of 0.05% compares favorably to that of the industry. Thus, given the decent earnings strength, it will be able to continue meeting debt obligations, even if the economic situation worsens.
Steady Capital Deployments: Cullen/Frost has sustainable capital-deployment activities. In October 2020, the company announced a 1.4% increase in quarterly stock dividend, following hikes annually for 27 consecutive years. Further, the company’s board of directors approved a common stock- repurchase program worth $100 million.
Expansion Strategy: Cullen/Frost is undertaking efforts to expand in the Texas market. Furthermore, with a developed infrastructure, it continues to explore opportunities in the Houston region. The strategies will likely support the company’s top-line growth in the quarters ahead.
Strong Leverage: Cullen/Frost’s debt/equity ratio is 0.06 compared with the industry average of 0.19. It highlights the financial stability of the company even amid adverse economic conditions.
Other Stocks Worth Considering
Northfield Bancorp, Inc. NFBK has witnessed an upward earnings estimate revision of 18.6% for the current year over the past 30 days. Its shares have gained 43.6% over the past six months. The company sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Synovus Financial Corp.’s SNV 2021 earnings estimate has moved 13.7% north in the past 30 days. Over the past six months, shares of the company have rallied 53.1%. At present, it flaunts a Zacks Rank of 1.
Origin Bancorp, Inc. OBNK recorded an upward earnings estimate revision of 10.7% for the ongoing year in 30 days’ time. Shares of this bank have appreciated 69.1% over the past six months. The stock currently sports a Zacks Rank #1.
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