First Financial Bankshares FFIN seems to be an attractive pick now on the back of revenue strength and solid balance sheet position. Further, its earnings growth prospects and efforts to enhance shareholder value are encouraging.
Further, First Financial has been successful in gaining analysts’ confidence in terms of future earnings. The Zacks Consensus Estimate for current-year earnings has been revised marginally upward, over the past 30 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Moreover, at a time when broader markets are bearish, the stock has been performing well. Over the past year, shares of First Financial have rallied 25.9% against decline of 24% for the industry it belongs to.
Here are the major driving factors:
Revenue strength: First Financial has been witnessing consistent improvement in revenues. Over the last five years (ended 2017), total revenues recorded a compound annual growth rate (CAGR) of 9.1%. This was driven by impressive loan and deposit growth, which witnessed a CAGR of 6.8% and 9.6%, respectively, over the same time period.
Also, backed by strong balance sheet and liquidity position, the company will be able to undertake inorganic expansion moves. In January 2018, First Financial acquired Commercial State Bank, which helped boost its non-interest revenues source.
Therefore, the company’s revenues are projected to grow 15.8% in 2018 and 5.8% in 2019.
Earnings growth: First Financial has recorded an earnings growth rate of 8.4% over the last three to five years. Further, this earnings momentum is likely to continue in the near term as reflected by the company’s projected earnings per share growth rate of 31.2% and 6.8% in 2018 and 2019, respectively.
Superior Return on Equity: First Financial has a return on equity of 14.09% compared with the industry average of 9.64%. This reflects the company’s superiority in utilizing shareholders’ funds.
Strong leverage: First Financial’s debt/equity ratio is nil compared with the industry average of 0.44. The relatively strong financial health of the company will help it perform better than its peers under a dynamic business environment.
Other Stocks to Consider
Some other top-ranked stocks in the finance space are Zions Bancorporation ZION, CPB Inc. CPF and Western Alliance Bancorporation WAL. All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zions has witnessed an upward earnings estimate revision of nearly 1% for the current year, over the past 60 days. Also, the stock has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
CPB Inc. has recorded an upward earnings estimate revision of 1% for the current year, over the past 60 days. Also, it has a Value Score of B.
Western Alliance Bancorporation’s earnings estimates have remained stable for the current year, over the past 60 days. It has a Value Score of B.
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First Financial Bankshares, Inc. (FFIN) : Free Stock Analysis Report
Zions Bancorporation (ZION) : Free Stock Analysis Report
Western Alliance Bancorporation (WAL) : Free Stock Analysis Report
CPB Inc. (CPF) : Free Stock Analysis Report
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