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Industry Rank Analysis 8-17-11
Normally I like to look for either one very large industry that is doing particularly well or poorly, or a collection of smaller related industries that are. When a large number of very large related industries are also doing fairly well -- not topping the charts, but all in the top third -- it is also worth taking note of.
There are, however, some economic trends that cut across the conventional sector lines. That is particularly true if not all that long ago, the industry looked like a basket case.
That is the case this week. We break the domestic banks down into six different groups -- five regions plus what we call the Major Regionals, but in the past might have been called the Money Centers. Perhaps a better current term for the group now would be the “Too Big to Fails” (TBTF).
Today I am highlighting the smaller regional banks, plus two very closely-related industries, the Savings and Loans and the Consumer Loan Companies. The TBTFs are squarely in the middle of the pack, with an average rating of 3.00.
Zacks Industry Classifications
The Zacks industry classifications are very fine, with 256 different industries tracked. It is not particularly noteworthy if a single small industry shows up doing well; a single firm with good news can propel a one or two firm industry to the top (or bottom) of the charts.
It is interesting when you see a cluster of similar industries at the top of the list. The same holds true for the bottom of the list. The definition of size that matters here is not the total sales or market capitalization but the number of companies in the "industry."
Smaller Regional Bank Groups
The Consumer Loan companies are the smallest of the seven “industries” I am highlighting today, with 11 firms. That is still an above-average size for an industry. It is currently in 11th place, an improvement of one spot from last week, with an average rank of 2.36, unchanged from last week.
The worst of the group is the second smallest at 12 firms, the Southwestern Regional Banks. It is in 80th place, an improvement of 3 spots from last week with an unchanged average rank of 2.83. Normally that would not attract my attention, but it does when all the other regional bank industries are also doing well.
The other five are all huge in Zacks industry terms. Again, it is the number of firms in the industry, not the total market capitalization we are talking about here.
The best of the bunch are the Western Regional Banks, in 19th spot, an improvement of 9 places from last week as the average rank dipped to 2.45 from 2.53. For an industry with 40 firms in it, that is an impressive performance.
The Midwestern Regional Banks are in 35th place, improving seven spots with an average score of 2.58, down from 2.61 last week. That industry has 38 firms in it.
The Northeastern Regional Banks are in 58th place, slipping one spot even though the average rank improved to 2.68 from 2.70 last week. It has 57 firms. Right on its heels are the Savings and Loans, in 59th place, down three spots on an unchanged average rank of 2.69.
The largest of these industries is the Southeastern Regional Banks, with 75 firms. It is in 61st place, an improvement of 10 spots as the average rank dipped slightly to 2.75 from 2.76.
A Multitude of Zacks Rank Buys
All told, or the 290 firms in these industries, 39 (23.6%) of them hold the enviable Zacks #1 Rank, and an additional 69 (23.6%) have Zacks #2 Ranks. If the Zacks Ranks were random, then one would expect that 5% of the names in an industry would be #1s, and 15% would be #2s. This is by far the biggest total number of companies I have shown on these two lists in a very long time.
The vast majority of the number ones and twos are very small firms, only two could plausibly be called large caps -- Discover Financial (DFS - Analyst Report) and SLM Corp, aka Sallie Mae (SLM - Analyst Report) -- and even they are more like mid-caps. Only eleven others on the two lists even break the $1 billion market cap level.
On the other hand, twenty nine of them don’t even break the $100 million market-cap level. That does not however mean that they can’t be good investments. This is a case, though, where you might want to take a package approach -- buying five or six small positions rather than one or two large ones.
The valuations are all over the lot, but for the most part reasonable. Particularly if you are willing to look out to 2012 earnings.
One Thing to Keep in Mind
The biggest concern among the smaller banks has been the quality of the loans that they have made in the past. In bad economic times, people tend to default on their loans much more frequently than in good times. Many of the smaller banks have been very exposed to the real estate sector as well as to the consumer.
Recently, though, the consumer credit picture has been improving as delinquencies have dropped. They are still at very high levels, but are at least moving in the right direction.
Meanwhile, the basic business of a bank is to borrow money cheaply, mostly in the form of deposits, and then to lend it out at higher rates. The Fed has made clear that it is going to keep the interest rates that banks borrow at extremely low until at least the middle of 2012. The interest rates that consumers pay have come down as well, but not by as much.
The banks then have to be able to collect what they are owed on the higher interest rate loans. That has been a huge concern over the last few years, but it looks like many of the smaller banks have made significant progress in working their way through the piles of bad debt. The lower loan loss provisions and write-offs have lead to some HUGE earnings estimate increase for both this year and next.
A Final Caveat
Most of these small firms are only covered by a handful of analysts. Thus, we might not see quite as many continued estimate increases as we do with better followed firms. One of the big reasons that an estimate in motion tends to stay in motion is that not all the analysts raise their numbers at the same time, and analysts playing “catch up” help the mean estimate to continue to rise.
That is less likely to be the case if there are just one or two analysts following the firm. Still, increases of over 50% for firms like Heartland Financial (HTLF - Snapshot Report), Metro Bancorp (METR - Snapshot Report) and Encore Bancshares (EBTX - Snapshot Report) are nothing to be sneered at, particularly when they are matched with large increases for next year as well.
If you are looking to put a bank in your portfolio, it might be a good idea to think small. These small banks, many with just a handful of branches, are not likely to be heavily exposed to things like bad European Sovereign Debt. If the bad domestic debt is being worked through, then the generosity of the Fed’s easy money policies should make the smaller banks very profitable.
It is also very likely that many of these smaller banks could be gobbled up by larger banks. While that alone is not a good reason to invest in a stock, it can be a nice kicker when it happens.
Number 1 Ranked Firms
Normally I like to look for either one very large industry that is doing particularly well or poorly, or a collection of smaller related industries that are. When a large number of very large related industries are also doing fairly well -- not topping the charts, but all in the top third -- it is also worth taking note of.
There are, however, some economic trends that cut across the conventional sector lines. That is particularly true if not all that long ago, the industry looked like a basket case.
That is the case this week. We break the domestic banks down into six different groups -- five regions plus what we call the Major Regionals, but in the past might have been called the Money Centers. Perhaps a better current term for the group now would be the “Too Big to Fails” (TBTF).
Today I am highlighting the smaller regional banks, plus two very closely-related industries, the Savings and Loans and the Consumer Loan Companies. The TBTFs are squarely in the middle of the pack, with an average rating of 3.00.
Zacks Industry Classifications
The Zacks industry classifications are very fine, with 256 different industries tracked. It is not particularly noteworthy if a single small industry shows up doing well; a single firm with good news can propel a one or two firm industry to the top (or bottom) of the charts.
It is interesting when you see a cluster of similar industries at the top of the list. The same holds true for the bottom of the list. The definition of size that matters here is not the total sales or market capitalization but the number of companies in the "industry."
Smaller Regional Bank Groups
The Consumer Loan companies are the smallest of the seven “industries” I am highlighting today, with 11 firms. That is still an above-average size for an industry. It is currently in 11th place, an improvement of one spot from last week, with an average rank of 2.36, unchanged from last week.
The worst of the group is the second smallest at 12 firms, the Southwestern Regional Banks. It is in 80th place, an improvement of 3 spots from last week with an unchanged average rank of 2.83. Normally that would not attract my attention, but it does when all the other regional bank industries are also doing well.
The other five are all huge in Zacks industry terms. Again, it is the number of firms in the industry, not the total market capitalization we are talking about here.
The best of the bunch are the Western Regional Banks, in 19th spot, an improvement of 9 places from last week as the average rank dipped to 2.45 from 2.53. For an industry with 40 firms in it, that is an impressive performance.
The Midwestern Regional Banks are in 35th place, improving seven spots with an average score of 2.58, down from 2.61 last week. That industry has 38 firms in it.
The Northeastern Regional Banks are in 58th place, slipping one spot even though the average rank improved to 2.68 from 2.70 last week. It has 57 firms. Right on its heels are the Savings and Loans, in 59th place, down three spots on an unchanged average rank of 2.69.
The largest of these industries is the Southeastern Regional Banks, with 75 firms. It is in 61st place, an improvement of 10 spots as the average rank dipped slightly to 2.75 from 2.76.
A Multitude of Zacks Rank Buys
All told, or the 290 firms in these industries, 39 (23.6%) of them hold the enviable Zacks #1 Rank, and an additional 69 (23.6%) have Zacks #2 Ranks. If the Zacks Ranks were random, then one would expect that 5% of the names in an industry would be #1s, and 15% would be #2s. This is by far the biggest total number of companies I have shown on these two lists in a very long time.
The vast majority of the number ones and twos are very small firms, only two could plausibly be called large caps -- Discover Financial (DFS - Analyst Report) and SLM Corp, aka Sallie Mae (SLM - Analyst Report) -- and even they are more like mid-caps. Only eleven others on the two lists even break the $1 billion market cap level.
On the other hand, twenty nine of them don’t even break the $100 million market-cap level. That does not however mean that they can’t be good investments. This is a case, though, where you might want to take a package approach -- buying five or six small positions rather than one or two large ones.
The valuations are all over the lot, but for the most part reasonable. Particularly if you are willing to look out to 2012 earnings.
One Thing to Keep in Mind
The biggest concern among the smaller banks has been the quality of the loans that they have made in the past. In bad economic times, people tend to default on their loans much more frequently than in good times. Many of the smaller banks have been very exposed to the real estate sector as well as to the consumer.
Recently, though, the consumer credit picture has been improving as delinquencies have dropped. They are still at very high levels, but are at least moving in the right direction.
Meanwhile, the basic business of a bank is to borrow money cheaply, mostly in the form of deposits, and then to lend it out at higher rates. The Fed has made clear that it is going to keep the interest rates that banks borrow at extremely low until at least the middle of 2012. The interest rates that consumers pay have come down as well, but not by as much.
The banks then have to be able to collect what they are owed on the higher interest rate loans. That has been a huge concern over the last few years, but it looks like many of the smaller banks have made significant progress in working their way through the piles of bad debt. The lower loan loss provisions and write-offs have lead to some HUGE earnings estimate increase for both this year and next.
A Final Caveat
Most of these small firms are only covered by a handful of analysts. Thus, we might not see quite as many continued estimate increases as we do with better followed firms. One of the big reasons that an estimate in motion tends to stay in motion is that not all the analysts raise their numbers at the same time, and analysts playing “catch up” help the mean estimate to continue to rise.
That is less likely to be the case if there are just one or two analysts following the firm. Still, increases of over 50% for firms like Heartland Financial (HTLF - Snapshot Report), Metro Bancorp (METR - Snapshot Report) and Encore Bancshares (EBTX - Snapshot Report) are nothing to be sneered at, particularly when they are matched with large increases for next year as well.
If you are looking to put a bank in your portfolio, it might be a good idea to think small. These small banks, many with just a handful of branches, are not likely to be heavily exposed to things like bad European Sovereign Debt. If the bad domestic debt is being worked through, then the generosity of the Fed’s easy money policies should make the smaller banks very profitable.
It is also very likely that many of these smaller banks could be gobbled up by larger banks. While that alone is not a good reason to invest in a stock, it can be a nice kicker when it happens.
Number 1 Ranked Firms
| Company | Ticker | Market Cap ($ mil) | P/E Using Curr FY Est | P/E Using Next FY Est | % Change Curr FY Est - 4 wk | % Change Next FY Est - 4 wk | Current Price |
| Discover Fin Sv | DFS | $12,730 | 6.54 | 7.83 | 2.40% | 1.73% | $23.33 |
| Slm Corp | SLM | $7,326 | 7.57 | 7.06 | 5.28% | 5.16% | $13.89 |
| Tfs Financial | TFSL | $2,665 | 345.6 | 61.71 | 400.00% | 7.69% | $8.64 |
| Webster Finl Cp | WBS | $1,466 | 11.1 | 10.36 | 7.21% | 7.58% | $16.75 |
| Texas Cap Bcshs | TCBI | $893 | 13.94 | 11.47 | 15.54% | 12.21% | $23.99 |
| Wesbanco Inc | WSBC | $452 | 10.1 | 8.96 | 8.61% | 7.87% | $16.99 |
| Chemical Finl | CHFC | $447 | 11.31 | 10.22 | 6.14% | 3.91% | $16.29 |
| Wash Tr Bancorp | WASH | $330 | 11.11 | 10.18 | 2.62% | 4.55% | $20.30 |
| Hudson Vly Hldg | HVB | $314 | 11.79 | 9.47 | 25.42% | 14.64% | $17.74 |
| Eagle Bcp Inc | EGBN | $235 | 10.79 | 8.83 | 6.02% | 8.25% | $11.87 |
| Territorial Bcp | TBNK | $234 | 17.01 | 15.77 | 2.69% | 4.80% | $19.50 |
| Heartland Fincl | HTLF | $231 | 10.28 | 9.51 | 51.85% | 10.47% | $14.05 |
| Enterprise Finl | EFSC | $227 | 8.11 | 8.05 | 15.80% | 11.68% | $13.08 |
| German Amer Bcp | GABC | $197 | 10.14 | 9.87 | 13.20% | 9.31% | $15.65 |
| Trico Bancshrs | TCBK | $187 | 17.03 | 11.6 | 15.48% | 10.96% | $11.75 |
| Fox Chase Bancp | FXCB | $186 | 34.51 | 27.17 | 15.63% | 8.05% | $12.77 |
| Home Fedl Bcp | HOME | $162 | N/A | N/A | 25.00% | 13.04% | $9.81 |
| Mainsource Finl | MSFG | $157 | 8.24 | 7.46 | 30.52% | 15.74% | $7.79 |
| Bridge Cap Hldg | BBNK | $154 | 23.03 | 15.5 | 6.20% | 5.48% | $10.19 |
| Center Bancorp | CNBC | $153 | 12.3 | 11.27 | 6.99% | 3.09% | $9.41 |
| Metro Bancorp | METR | $148 | 20.01 | 16.25 | 50.94% | 48.12% | $10.67 |
| Alliance Finl | ALNC | $144 | 10.8 | 10.59 | 9.14% | 11.94% | $30.30 |
| West Bancorp | WTBA | $142 | 9.94 | 8.58 | 5.13% | 2.15% | $8.15 |
| Hanmi Finl Cp | HAFC | $140 | 4.62 | 6.6 | 14.29% | 0.00% | $0.92 |
| First Defiance | FDEF | $129 | 10.81 | 8.57 | 21.78% | 6.90% | $13.29 |
| Midwestone Finl | MOFG | $127 | 10.71 | 9.81 | 24.10% | 23.97% | $14.71 |
| Encore Bancshrs | EBTX | $126 | 23.96 | 15.77 | 56.41% | 32.38% | $10.96 |
| Northrim Bcp | NRIM | $122 | 12.89 | 11.81 | 6.50% | 3.21% | $19.01 |
| Kaiser Fedl Fin | KFFG | $116 | 13.81 | 12.99 | 2.92% | 2.75% | $12.15 |
| Heritage Commrc | HTBK | $111 | 26.09 | 16.47 | 43.38% | 4.39% | $4.24 |
| Access Natl Cp | ANCX | $86 | 9.05 | 9.25 | 12.27% | 14.74% | $8.28 |
| C&F Finl Cp | CFFI | $70 | 6.21 | N/A | 20.00% | N/A | $22.35 |
| North Valley Bc | NOVB | $67 | 31.42 | 12.18 | 29.17% | 1.91% | $9.74 |
| Intervest Bcsh | IBCA | $64 | 7.53 | 6.54 | 0.00% | 0.00% | $3.01 |
| Central Vly Com | CVCY | $62 | 10.27 | 8.75 | 33.68% | 31.86% | $6.52 |
| Macatawa Bank | MCBC | $52 | 11.35 | 26.82 | 85.71% | 0.00% | $2.95 |
| Republic Fst Bc | FRBK | $51 | N/A | 83.57 | 20.69% | N/A | $1.95 |
| Newport Bcp Md | NFSB | $46 | 27.6 | 22.46 | 11.63% | 5.36% | $13.25 |
| First Bus Finl | FBIZ | $39 | 6.42 | 5.8 | 23.68% | 23.81% | $15.08 |
| Company | Ticker | Market Cap ($ mil) | P/E Using Curr FY Est | P/E Using Next FY Est | % Change Curr FY Est - 4 wk | % Change Next FY Est - 4 wk | Current Price |
| Peoples Utd Fin | PBCT | $3,957 | 16.64 | 12.48 | 0.82% | 2.78% | $11.05 |
| East West Bc | EWBC | $2,418 | 10.49 | 9.07 | 2.33% | 0.56% | $16.26 |
| First Niagara | FNFG | $2,168 | 9.93 | 8.38 | 4.04% | 6.56% | $10.35 |
| Credit Accept | CACC | $1,837 | 10.42 | 9.03 | 1.40% | 2.38% | $71.77 |
| Capitol Fedl Fn | CFFN | $1,819 | 27.07 | 24.2 | 1.58% | -0.28% | $10.86 |
| Investors Bancp | ISBC | $1,519 | 18.53 | 16.11 | 2.84% | 3.92% | $13.42 |
| Hancock Hldg Co | HBHC | $1,262 | 14.51 | 11.05 | 17.85% | 4.58% | $28.75 |
| Umpqua Hldgs Cp | UMPQ | $1,097 | 15.95 | 11.8 | 8.11% | 6.57% | $9.57 |
| Natl Penn Bcshs | NPBC | $1,014 | 13.22 | 10.91 | 10.00% | 3.20% | $6.69 |
| Bancorpsouth | BXS | $904 | 23.97 | 12.24 | 108.82% | 1.87% | $10.83 |
| Commnty Bk Sys | CBU | $841 | 10.81 | 10.44 | 5.84% | 4.54% | $22.85 |
| Providnt Fin Sv | PFS | $724 | 11.57 | 10.02 | -0.39% | 1.33% | $11.97 |
| Home Bancshares | HOMB | $662 | 12.93 | 12.3 | 4.52% | 3.34% | $23.25 |
| Columbia Bk Sys | COLB | $599 | 17.88 | 15.24 | 14.05% | 11.48% | $15.16 |
| Northfield Bncp | NFBK | $531 | 30.39 | 28.98 | 5.13% | 2.38% | $12.46 |
| Oriental Finl | OFG | $455 | 8.38 | 6.04 | 56.52% | 15.51% | $10.05 |
| Boston Priv Fin | BPFH | $444 | 15.24 | 10.23 | 138.74% | 7.89% | $5.77 |
| Tompkins Fin Cp | TMP | $428 | 11.93 | 11.2 | 2.17% | 1.08% | $39.30 |
| First Finl-Ind | THFF | $387 | 11.5 | 12.02 | 6.89% | 1.03% | $29.45 |
| Commun Trust Bc | CTBI | $386 | 10.52 | 10.15 | 2.36% | 2.92% | $25.06 |
| Cascade Bancorp | CACB | $368 | 10.67 | 129.83 | 14.96% | 71.43% | $7.79 |
| Sandy Spring | SASR | $358 | 11.11 | 10.34 | 2.79% | 0.35% | $14.86 |
| Lakeland Finl | LKFN | $337 | 11.34 | 9.86 | 4.11% | 1.69% | $20.81 |
| Berkshire Hills | BHLB | $336 | 13.29 | 10.39 | 0.50% | 1.05% | $20.03 |
| Southside Bancs | SBSI | $326 | 8.51 | 8.22 | 21.35% | 14.76% | $19.82 |
| Stellarone Corp | STEL | $239 | 18.69 | 13.49 | 7.73% | 4.57% | $10.42 |
| Bryn Mawr Bk Cp | BMTC | $228 | 11.62 | 9.77 | 1.84% | 0.72% | $18.18 |
| Banner Corp | BANR | $225 | N/A | N/A | 42.12% | 25.46% | $13.63 |
| Great South Bcp | GSBC | $219 | 10.81 | 9.1 | 0.44% | 0.37% | $16.28 |
| Sun Bancorp/Nj | SNBC | $213 | N/A | 37.93 | 8.87% | 800.00% | $2.56 |
| Ameris Bancorp | ABCB | $211 | 27.57 | 12.45 | 85.35% | 11.56% | $8.89 |
| Westfield Finl | WFD | $204 | 32.72 | 27.73 | 7.23% | 5.00% | $7.28 |
| Cobiz Finl Inc | COBZ | $186 | 15.39 | 9.32 | 15.93% | 5.64% | $5.02 |
| Citizens&Nrthrn | CZNC | $181 | 8.35 | 8.69 | 5.33% | 2.40% | $14.86 |
| Capital City Bk | CCBG | $176 | 34.02 | 21.44 | 63.02% | -2.48% | $10.29 |
| Natl Bnkshrs Va | NKSH | $175 | 10.5 | 10.28 | 2.34% | 2.50% | $25.30 |
| Virginia Commrc | VCBI | $173 | 8.29 | 7.41 | 22.74% | 11.88% | $5.82 |
| Bank Of Ky Finl | BKYF | $171 | 12.33 | 10.38 | 2.19% | 0.00% | $23.05 |
| Omniamerican Bc | OABC | $168 | 38.24 | 29.48 | 23.33% | 6.67% | $14.15 |
| Merchants Bancs | MBVT | $161 | 11.44 | 10.6 | 0.89% | 2.08% | $25.97 |
| First Bcp-Nc | FBNC | $154 | 12.77 | 8.74 | 27.11% | 10.29% | $9.13 |
| Cnb Finl Cp Pa | CCNE | $149 | 9.97 | 8.62 | 3.41% | 0.00% | $12.10 |
| Sierra Bancorp | BSRR | $146 | 18.43 | 12.86 | 9.13% | 1.24% | $10.46 |
| Essa Bancorp | ESSA | $137 | 26.52 | 25.27 | 5.19% | 13.33% | $10.74 |
| Bridge Bancorp | BDGE | $124 | 12.66 | 11.74 | 4.83% | 3.80% | $19.25 |
| Asta Funding | ASFI | $122 | 10.68 | 10.41 | 13.04% | 48.15% | $8.33 |
| Peopl Bncp-Ohio | PEBO | $122 | 13.7 | 10.71 | 26.32% | 13.16% | $11.51 |
| Compucredit Hld | CCRT | $118 | N/A | N/A | 14.23% | 24.85% | $3.09 |
| Amer Natl Bnksh | AMNB | $115 | 13.89 | 11.05 | 3.46% | 6.62% | $18.68 |
| Heritage Fin Gp | HBOS | $99 | 452.4 | 47.13 | 0.00% | 26.32% | $11.31 |
| Horizon Bncp-In | HBNC | $93 | 8.9 | 8.69 | 7.10% | 3.89% | $27.87 |
| Pulaski Finl Cp | PULB | $72 | 12.64 | 10.43 | 15.56% | -4.55% | $6.57 |
| Mercantile Bank | MBWM | $70 | 9.97 | 9.2 | 54.03% | 15.03% | $8.10 |
| Teche Holding | TSH | $66 | 9.58 | 8.08 | 1.22% | 1.28% | $31.90 |
| Bnc Bancorp | BNCN | $62 | 41.51 | 13.52 | 17.86% | 1.33% | $6.85 |
| Old Point Finl | OPOF | $56 | 13.23 | 8.08 | 35.71% | -17.16% | $11.31 |
| Mutualfirst Fin | MFSF | $55 | 19.82 | 8.85 | 0.00% | 0.00% | $7.83 |
| Citizens South | CSBC | $46 | N/A | 15.08 | 43.53% | 14.49% | $3.97 |
| Chesapeake Finc | CPKF | $45 | 7.22 | 6.83 | 7.78% | 7.89% | $14.00 |
| Malvern Fedl Bc | MLVF | $43 | N/A | 21.51 | 28.33% | 925.00% | $7.10 |
| Somerset Hills | SOMH | $42 | 15.94 | 12.97 | 2.13% | 3.51% | $7.65 |
| Ecb Bancorp Inc | ECBE | $36 | N/A | 31.17 | 43.64% | 166.67% | $12.47 |
| Summit State Bk | SSBI | $30 | 14.32 | 13.7 | 22.22% | 12.19% | $6.30 |
| Mbt Finl Corp | MBTF | $22 | N/A | 8.67 | 20.51% | 66.67% | $1.30 |
| Valley Finl Cp | VYFC | $22 | 5.47 | N/A | 6.25% | N/A | $4.65 |
| Preferred Bank | PFBC | $20 | 18.83 | 11.67 | 200.00% | 54.80% | $7.53 |
| First Commty Cp | FCCO | $20 | 12.79 | 10.02 | 18.99% | 4.35% | $6.01 |
| Old Second Bcp | OSBC | $18 | N/A | N/A | 30.26% | 26.46% | $1.30 |
| Premierwest Bcp | PRWT | $12 | N/A | N/A | 20.83% | 30.06% | $1.24 |
In evaluating the Zacks Industry Ranks, you want to see two things: a good overall score (low, meaning more Zacks #1 and #2 Ranked stocks than #4 or #5 Ranked stocks) and some improvement the relative position from the prior week. It is also helpful to understand exactly what the Zacks Industry Rank is.
The Zacks Industry Rank is the un-weighted average of the individual Zacks ranks of the firms in that industry. It does not matter if the stock is the 800 lb gorilla that dominates the industry or some very small niche player in the industry -- they have the same influence on the industry rank.
Also, that means that the bigger the industry in terms of number of firms, the less influence any given company has on the industry rank. It also implies that small industries, with just two or three firms, should be the ones found at either the top or the bottom of the list. After all, if there are only two firms in the industry, it is relatively easy to get a Zacks rank of 2.00 (i.e. one with a Zacks Rank of #1 and the other with a #3). Right now, that industry rank would be tied for 6th place among the 255 industries tracked.
The same obviously goes for the bottom of the list as well. If there are 50 firms in the industry, and it ends up at one of the extremes, that means there has to be something pretty significant going on. Thus, I do not always focus on the very highest rated industries, but on the highest rated ones in which there are a large number of firms.
Click here for the Zacks Industry Rank List: http://www.zacks.com/zrank/zrank_inds.php
Read the full analyst report on SLM
Read the full analyst report on METR
Read the full analyst report on HTLF
Read the full analyst report on DFS
Read the full analyst report on EBTX
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