Huntington Bancshares HBAN appears to be a solid bet right now because of its sound organic and inorganic growth strategies. This Ohio-based bank holding company experienced growth in revenues along with loan and deposit balances, over the last few years. Also, the improving economic backdrop, such as increasing interest rates and tax reform, are likely to further support its financials.
Shares of Huntington have gained 12.2% over the past year, outperforming the 6.8% rally for the industry it belongs to.
The Zacks Consensus Estimate for 2017 earnings has remained stable at 89 cents, over the last 30 days. The stock currently sports a Zacks Rank #1 (Strong Buy).
Why the Surge May Continue
Revenue Growth: Top-line growth remains a key strength at Huntington. Over a three-year period (ended 2016), its revenues have witnessed a compounded annual growth rate (CAGR) of 13.1%. Management expects total revenues for full-year 2017 to increase 23%.
Impressive Balance Sheet Growth: The company’s loans and deposits have witnessed a CAGR of 12.5% and 14%, respectively, over a three-year period (ended 2016). Further, management expects average balance sheet growth to be more than 20%, driven mainly by the FirstMerit acquisition. Also, both loan and deposit balances are likely to get support from an improving economy.
Inorganic Growth Prospects: Backed by its robust liquidity position, Huntington is poised to grow via acquisitions. In August 2016, it acquired FirstMerit to fortify its Midwest footprint. Earlier, in April 2015, the company had closed the acquisition of Macquarie Equipment Finance. It continues to position itself for growth and implement strategic initiatives designed to drive revenue growth.
Favorable VGM Score: Huntington 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 (Buy) offer the best upside potential.
Stock Looks Undervalued: The stock currently has a Value Score of B. Also, it looks undervalued with respect to its price-to-cash flow and price-to-earnings (F1) ratios. The company’s trailing 12-month P/CF and P/E ratios of 13.01 and 13.71, respectively, are below the industry average of 14.70 and 15.10.
Superior Return on Equity (ROE): Huntington has an impressive ROE of 11.96% compared with the industry average of 9.42%. This indicates that the company reinvests more efficiently than its peers.
Other Stocks to Consider
Texas Capital Bancshares’ TCBI Zacks Consensus Estimate for earnings for 2017 was revised slightly upward, in the last 30 days. Also, its share price has increased 19.3% in the past 12 months. The stock sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
TCF Financial Corporation TCF also sports a Zacks Rank of 1. The stock’s 2017 earnings estimates have remained stable, in the last 30 days. Further, the company’s shares have gained 9.8% in a year’s time.
Peoples Bancorp PEBO Zacks Consensus Estimate for earnings for 2017 has remained stable, over the last 30 days. In the past year, its shares have gained 4.6%. It carries a Zacks Rank of 2.
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Huntington Bancshares Incorporated (HBAN) : Free Stock Analysis Report
Peoples Bancorp Inc. (PEBO) : Free Stock Analysis Report
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