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The recent Fed rate hike, along with the Trump factor, is aiding the banking sector to emerge from the adverse impact of the prolonged low-interest rate environment. The improving interest rate environment will assist in top-line expansion of the banking firms, besides easing the pressure on net interest margin.
Amid such background, a careful selection of banking stocks by looking at fundamentals should enable investors to easily make money.
Wintrust Financial Corporation (WTFC - Free Report) is one such stock that has been performing well since the beginning of the year, driven by the company’s in-built strength. Shares of the company have gained more than 49% so far this year, outperforming the Zacks categorized Midwest Banks industry’ growth of 34.1%.
A solid industry backdrop and its Zacks Rank #2 (Buy) should help the stock move higher in the coming months.
Why the Price Rally Should Continue
Superior Sales Growth: The company’s estimated sales growth for the current year is 14%, compared with the industry average of just 4.3%. Further, the projected sale growth for 2017 is 7.5%.
Strong Industry: Currently, out of more than 260 Zacks classified industries, the Midwest Banks space has a Zacks Industry Rank of 17 (Top 6%). Amid the unpredictable market conditions, it is important to consider the performance of an industry. In fact, studies have shown that an average stock in a sturdy industry is likely to outperform a great stock in a poor industry. With consistent overall economic strength, banks with footprint in the Midwest should benefit from increasing loan and deposit balances, along with improving asset quality.
Inorganic growth prospects: Wintrust Financial is focused on expanding its franchise finance business. In Mar 2016, the company completed the acquisition of Wisconsin-based Generations Bancorp, Inc. Further, in Aug 2016, the company acquired select loans and related relationships from GE Capital Franchise Finance, which is expected to be accretive to the company’s earnings per share in 2016 and 2017.
Other Stocks to Consider
Eagle Bancorp Montana, Inc. (EBMT - Free Report) : Over the last 60 days, the Zacks Consensus Estimate for the stock for the current year has moved up 4.9% to $1.28.
First Financial Corporation (THFF - Free Report) : The Zacks Consensus Estimate for the stock for the current year has revised up 1.2% to $2.63 for the same time period.
Commerce Bancshares, Inc. (CBSH - Free Report) carries same rank as Wintrust Financial. The Zacks Consensus Estimate for the stock for the current year has inched up 1.1% to $2.64 over the last 60 days.
Zacks’ Best Private Investment Ideas
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
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Why Wintrust Financial is a Good Stock to Buy Now
The recent Fed rate hike, along with the Trump factor, is aiding the banking sector to emerge from the adverse impact of the prolonged low-interest rate environment. The improving interest rate environment will assist in top-line expansion of the banking firms, besides easing the pressure on net interest margin.
Amid such background, a careful selection of banking stocks by looking at fundamentals should enable investors to easily make money.
Wintrust Financial Corporation (WTFC - Free Report) is one such stock that has been performing well since the beginning of the year, driven by the company’s in-built strength. Shares of the company have gained more than 49% so far this year, outperforming the Zacks categorized Midwest Banks industry’ growth of 34.1%.
A solid industry backdrop and its Zacks Rank #2 (Buy) should help the stock move higher in the coming months.
Why the Price Rally Should Continue
Superior Sales Growth: The company’s estimated sales growth for the current year is 14%, compared with the industry average of just 4.3%. Further, the projected sale growth for 2017 is 7.5%.
Strong Industry: Currently, out of more than 260 Zacks classified industries, the Midwest Banks space has a Zacks Industry Rank of 17 (Top 6%). Amid the unpredictable market conditions, it is important to consider the performance of an industry. In fact, studies have shown that an average stock in a sturdy industry is likely to outperform a great stock in a poor industry. With consistent overall economic strength, banks with footprint in the Midwest should benefit from increasing loan and deposit balances, along with improving asset quality.
Inorganic growth prospects: Wintrust Financial is focused on expanding its franchise finance business. In Mar 2016, the company completed the acquisition of Wisconsin-based Generations Bancorp, Inc. Further, in Aug 2016, the company acquired select loans and related relationships from GE Capital Franchise Finance, which is expected to be accretive to the company’s earnings per share in 2016 and 2017.
Other Stocks to Consider
Eagle Bancorp Montana, Inc. (EBMT - Free Report) : Over the last 60 days, the Zacks Consensus Estimate for the stock for the current year has moved up 4.9% to $1.28.
First Financial Corporation (THFF - Free Report) : The Zacks Consensus Estimate for the stock for the current year has revised up 1.2% to $2.63 for the same time period.
Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Commerce Bancshares, Inc. (CBSH - Free Report) carries same rank as Wintrust Financial. The Zacks Consensus Estimate for the stock for the current year has inched up 1.1% to $2.64 over the last 60 days.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>