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Is it Worth Holding on to Hilltop Holdings (HTH) Stock Now?

Zacks Equity Research

Hilltop Holdings Inc.’s HTH shares increased 55.1% in 2016, outpacing the 40.4% gain for the Zacks categorized Southeast Banks industry.

Hilltop Holdings’ solid organic growth strategy is expected to further enhance its profitability. Also, the company’s capital deployment plans remain impressive, reflecting strong balance sheet. Nonetheless, one should not be too optimistic about the company as persistent pressure on margins and escalated expenses remain key concerns.

Further, the stock’s current-year estimates have been revised nearly 2.8% downward, over the past 60 days while its 2018 estimates remained stable. As a result, the stock currently carries a Zacks Rank #3 (Hold).

First checking into fundamentals, Hilltop Holding remains focused on organic growth strategy. Net interest income has increased at a CAGR of 15.8% for the last three years (2014–2016), partly driven by the acquisitions completed during this period. Also, loan and deposit growth will support the top line in the quarters ahead.

Moreover, Hilltop Holding has an efficient capital deployment strategy in place. With a solid balance sheet position, the company is expected to continue enhancing shareholders’ value.

However, margin pressure remains a concern despite the optimistic rate hike scenario. Hilltop Holding expects core margin to be in the range of 3.02–3.08% in 2017, assuming no further rate hikes this year.

Further, Hilltop Holding’s non-interest expenses have been witnessing a constant rise. Increasing regulatory costs, along with continued investments in franchise are expected to keep expenses high, going ahead.

Some stocks worth considering in the same space include Bank of the Ozarks, Inc. OZRK, Synovus Financial Corp. SNV and Triumph Bancorp, Inc. TBK. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of the Ozarks has witnessed an upward earnings estimate revision of 1.3% for the current year, in the past 60 days. Its share price has increased 41.5% in the last six months.
Synovus Financial, for the current year, has witnessed its Zacks Consensus Estimate revising 3.2% upward, over the last 60 days. Its share price has increased 30.4% in the last six months.

Triumph Bancorp has witnessed an upward earnings estimate revision of nearly 1% for the current year, in the past 60 days. Its share price increased 37.8% in the last six months.    

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Synovus Financial Corp. (SNV): Free Stock Analysis Report
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