Huntington (HBAN) Rises 28.5% YTD: Can the Rally Continue?
Shares of Huntington Bancshares HBAN have appreciated 28.5% so far this year, outperforming 25% growth recorded by the industry it belongs to. Also, the stock has gained considerably more than the S&P 500’s rally of 2.8% in the same time frame.
The impressive year-to-date price performance marks a significant rebound from last year’s performance. In 2020, the lender’s shares had witnessed a decline of 16.2%.
Despite the lingering concerns related to the pandemic, Huntington’s performance has been aided byits continued efforts to expand footprint through strategic initiatives and animproving credit quality.
YTD Price Performance
Additionally, earnings estimates for this Zacks Rank #3 (Hold) stock has been witnessing upward revisions of late, reflecting analysts’ optimism regarding its growth potential. Over the past 60 days, the Zacks Consensus Estimate for Huntington’s 2021 and 2022 earnings has moved upwardby11.3% and 6%, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Now let’s check out some of the major factors that are likely to provide further impetus to Huntington’s stock.
Growth Initiatives: In December 2020, the company inked a deal to acquire TCF Financial TCF, which islikely tostrengthen its position in the banking spacefurther. The combined company is likely to become one of the top 10 U.S. regional banks, along with attaininga rank 5 in approximately 70% of deposit markets.
The deal will bolster Huntington’s presence in Minnesota, Colorado, Wisconsin and South Dakota, along with reinforcingits hold in Chicago. Notably, per Huntington’s expectations, the deal is likely to be 18% accretive to earnings by year-end 2022, including the fully phased-in transaction cost synergies.
Credit Quality: Huntington’s faster-than-expected improvement in the company’s credit quality is impressive. Credit metrics have been gradually improving since the last quarter of 2009, except for the third quarter of 2012, as a result of the new regulatory guidance. Though credit quality deteriorated due to the impacts of the coronavirus mayhem in 2020, the same is likely to witness improvement on the back of economic recovery.
Earnings Strength: The company’s earnings have witnessed growth of 1.6% in the past three-five years. The upward momentum is anticipated to continue in the near term. In 2021, earnings are projected to grow 86%.
Favorable Zacks Industry Rank: Huntington is part of that Zacks industry, which currently carries a Zacks Industry Rank #13 (placing it at the top 5% of more than 250 Zacks industries).
The Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Key Industry Picks
A couple of stocks from the same space worth a look are mentioned below.
Associated BancCorp ASB has witnessed an upward earnings estimate revision of 28.2% for 2021 over the past 60 days. This Zacks Rank #1 stock has surged31.1% over the past three months.
UMB Financial Corporation UMBF current-year earnings estimates rose 22.6% in 60 days’ time. Further, the company’s shares have appreciated 33.3% over the past three months. At present, it flaunts a Zacks Rank #1.
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Huntington Bancshares Incorporated (HBAN) : Free Stock Analysis Report
UMB Financial Corporation (UMBF) : Free Stock Analysis Report
Associated BancCorp (ASB) : Free Stock Analysis Report
TCF Financial Corporation (TCF) : Free Stock Analysis Report
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