Zions Bancorporation, National Association ZION seems to be a solid bet now, based on strong fundamentals and impressive growth prospects. Higher interest rates, loan growth, improving credit quality and restructuring initiatives position the company well for growth. Exemption from being subjected to stringent regulations and the removal of SIFI label are major positives for the bank.
The company’s Zacks Consensus Estimate for earnings has moved 3.6% upward for both 2018 and 2019 over the past 60 days. The stock currently carries a Zacks Rank #2 (Buy).
Notably, its shares have rallied 1.3% in a year’s time against 4.6% decline of the industry it belongs to.
What Makes the Stock a Solid Pick?
Earnings Growth: Zions recorded 17.9% earnings growth over the last three-five years. This earnings momentum is likely to continue in the near term as well, as reflected by the company’s projected EPS growth rate of 42.3% and 5.8% for 2018 and 2019, respectively.
Moreover, Zions has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with the average beat being 11.5%.
Also, the company’s long-term (three-five years) estimated EPS growth rate of 8.5% promises rewards for investors.
Revenue Strength: Zions’ revenues witnessed a CAGR of 4.7% in the last five years (2013-2017), driven by growth in loans and rise in interest rates. With favorable macroeconomic developments and continued rise in the demand for loans, the bank will witness further increase in revenues. The company’s projected sales growth of 6.8% for 2018 and 4.2% for 2019 ensure continuation of the upward revenue trend.
Strong Leverage: Zions’ debt/equity ratio is 0.13 versus the industry average of 0.18, indicating a relatively lower debt burden. It also indicates the company’s financial stability amid adverse economic conditions.
Stock Seems Undervalued: With respect to the price-to-book (P/B) and price-to-earnings (P/E) ratios, Zions looks undervalued. The company’s P/B ratio of 1.29 is below the industry average of 1.54. Also, the P/E ratio of the company is 11.55 compared with the industry average of 13.03.
Additionally, Zions has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and to identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Favorable VGM Score: Zions has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Other Stocks to Consider
Other stocks in the banking space worth a look are People's Utah Bancorp PUB, Webster Financial Corporation WBS and Central Valley Community Bancorp CVCY, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
People's Utah Bancorp’s earnings estimates for the current year have been marginally revised upward over the past 60 days. Also, its shares have gained 9.4% over the past year.
Webster Financial’s earnings estimates for the current year have been revised 3.3% upward over the past 60 days. Its shares have gained 10.9% in the past year.
Central Valley Community’s earnings estimates for 2018 have moved up 5.4% over the past 60 days. Its share price has rallied nearly 1% in a year’s time.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Webster Financial Corporation (WBS) : Free Stock Analysis Report
People's Utah Bancorp (PUB) : Free Stock Analysis Report
Zions Bancorporation (ZION) : Free Stock Analysis Report
Central Valley Community Bancorp (CVCY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research