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It seems to be a wise idea to add Meta Financial Group, Inc. CASH stock to your portfolio now, given its underlying strength and solid growth prospects amid the coronavirus crisis. The company has been undertaking a number of efforts to improve its efficiency and optimize operations.
The bank has been witnessing upward estimate revisions, reflecting analysts’ optimism about its growth prospects. Over the past 60 days, the Zacks Consensus Estimate for its 2020 and 2021 earnings moved north.
The price performance also seems impressive. This Zacks Rank #2 (Buy) stock has gained 8% in the last three months as against the 6.7% decline of the industry.
There are a number of other aspects, which make the stock an attractive investment option.
5 Factors That Make Meta Financial an Attractive Buy
Revenue Strength: Organic growth is a key strength for Meta Financial. The top line witnessed a five-year (fiscal 2015-2019) compound annual growth rate of 46.3%. Decent loan demand and strong deposit balance are likely to keep supporting revenues.
In 2018, the company had acquired Crestmark Bancorp, Inc., which expanded its presence in the commercial lending industry, in turn boosting revenues. Though revenues are expected to fall marginally in the current year, the same is expected to grow at a rate of 3.3% in 2021.
Earnings per Share Growth: The company has witnessed a rise in earnings over the last three years. Notably, Meta Financial’s earnings for the current fiscal year are projected to jump 2.3%. This earnings momentum is likely to continue in the near term, as reflected by the company’s impressive earnings surprise history. Its bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed in the other.
Strong Leverage: Meta Financial’s debt/equity ratio is 0.25, compared with the industry average of 0.57, displaying a lower debt burden relative to the industry. It highlights the company’s financial stability even in an unstable economic environment.
Superior Return on Equity (ROE): Meta Financial’s ROE of 11.27% compares favorably with the industry average of 7.35%. This highlights the company’s commendable position over its peers in using shareholders’ funds.
Stock seems undervalued: With respect to the price/cash flow and price-earnings (F1) ratios, Meta Financial seems undervalued. It has a P/CF ratio of 4.42 and a P/E ratio of 6.83, both of which are below the respective industry average of 7.89 and 11.22.
Other Stocks to Consider
TD Ameritrade Holding Corporation AMTD has been witnessing upward estimate revisions for the past 60 days. Moreover, this Zacks #2 Ranked stock has gained 7.7% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Morgan Stanley MS has been witnessing upward estimate revisions for the past 60 days. Further, the company’s shares have gained 0.2% in the past three months. At present, it carries a Zacks Rank of 2.
Peoples Bancorp Inc. PEBO has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has depreciated 8.9% in three months’ time. It currently carries a Zacks Rank #2.
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