We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Probably the biggest beneficiary of Donald Trump’s electoral victory, bank stocks have been on a tear ever since election results were announced on Nov 8. The KBW Nasdaq Bank Index gained around 25% between Nov 8 and Dec 9 and has since then traded within a narrow bound as investors await firmer signals on the policy front from the new administration.
However, the tone of recently released banking results indicates that the sector may soon be moving higher. A series of positive earnings surprises has brightened the profit outlook for the sector and adding bank stocks to your portfolio would be a very smart option.
Bellwether Earnings Shine
Last Friday, indexes rode higher on better than expected bank earnings. Among those beating estimates for the fourth quarter was Wells Fargo & Company (WFC - Free Report) , Bank of America Corp. (BAC - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) and The PNC Financial Services Group, Inc. (PNC - Free Report) . Nearly all of these heavyweights also posted year-over-year earnings improvements though there was some weakness on the revenue front.
Top executives from these banks also expressed confidence about business prospects in their first public statements since the declaration of election results. Several analysts and market watchers believe that encouraging results and guidance from bellwethers reporting over the next few weeks could propel the sector upward.
Sector Prospects Bright, Small Banks to Gain
Banks are poised to gain from two key tailwinds in the near future. Firstly, the Fed is likely to speed up the pace of rate hikes this year which will results in higher margins for the banks. Secondly, the President-elect has made a promise to deregulate the banking sector, one which he is likely to keep given the large number of prominent bankers finding place in his administration.
Meanwhile, smaller banks are likely to reap the benefits of the Fed’s attempts to reduce the sector’s risk ahead of the presidential handover. According to the final standard issued by the central bank, large banks will have to hold a minimum level of total loss absorbing capacity. This increase in capitalization is designed at protecting depositors from steep losses. Meanwhile, banks with less than $250 billion in assets will be exempt from these norms, a rule which is likely to push up their stock prices relatively higher.
Our Choices
Banks have already been moving higher since election results were announced. Promising earnings results will only push the sector’s stocks higher even as the new administration holds out the promise of deregulation.
Additionally, the Fed is projected to raise rates at a faster pace which will boost bank margins. Picking bank stocks is an extremely prudent option in such a scenario. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
UMB Financial Corporation (UMBF - Free Report) is a bank holding company which is engaged in providing complete banking, asset management, health spending solutions and related financial services
UMB Financial has a Zacks Rank #1 (Strong Buy). The company has expected earnings growth of 12% for the current year. Its earnings estimate for the current year has improved by 1% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 25.The average quarterly EPS Surprise for the stock is 10.2% while the previous EPS surprise is 9.6%.
Hancock Holding Company is a bank holding as well as financial holding company.
Hancock Holding’s expected earnings growth for the current year is 35.2%. Its earnings estimate for the current year has improved by 9.1% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 17. The average quarterly EPS Surprise for the stock is 33.6% while the previous EPS surprise is 34.1%. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
State Street Corporation (STT - Free Report) is a financial holding company. The company primarily performs its business through its principal banking subsidiary, State Street Bank.
State Street Corp has a Zacks Rank #2 (Buy). The company has expected earnings growth of 13.8% for the current year. Its earnings estimate for the current year has improved by 1.4% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 25. The average quarterly EPS Surprise for the stock is 9.2% while the previous EPS surprise is 15.9%.
Citigroup Inc.’s (C - Free Report) organic growth remains a key strength, as reflected by its revenue growth story. Moreover, the company’s streamlining activities are on an upswing.
Citigroup has a Zacks Rank #2. The company has expected earnings growth of 10.7% for the current year. Its earnings estimate for the current year has improved by 1.4% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 18. The average quarterly EPS Surprise for the stock is 9.2% while the previous EPS surprise is 15.9%.
The Bank of New York Mellon Corporation’s (BK - Free Report) dedicated global reach, the company’s diversified product mix and inorganic growth opportunities will improve profitability going forward. Further, cost-saving initiatives will help sustain earnings momentum
Bank of New York Mellon has a Zacks Rank #2. The company has expected earnings growth of 10.5% for the current year. Its earnings estimate for the current year has improved by 1.5% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 19. The average quarterly EPS Surprise for the stock is 6.9% while the previous EPS surprise is 1.3%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Bank Stocks to Buy as Q4 Earnings Impress
Probably the biggest beneficiary of Donald Trump’s electoral victory, bank stocks have been on a tear ever since election results were announced on Nov 8. The KBW Nasdaq Bank Index gained around 25% between Nov 8 and Dec 9 and has since then traded within a narrow bound as investors await firmer signals on the policy front from the new administration.
However, the tone of recently released banking results indicates that the sector may soon be moving higher. A series of positive earnings surprises has brightened the profit outlook for the sector and adding bank stocks to your portfolio would be a very smart option.
Bellwether Earnings Shine
Last Friday, indexes rode higher on better than expected bank earnings. Among those beating estimates for the fourth quarter was Wells Fargo & Company (WFC - Free Report) , Bank of America Corp. (BAC - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) and The PNC Financial Services Group, Inc. (PNC - Free Report) . Nearly all of these heavyweights also posted year-over-year earnings improvements though there was some weakness on the revenue front.
Top executives from these banks also expressed confidence about business prospects in their first public statements since the declaration of election results. Several analysts and market watchers believe that encouraging results and guidance from bellwethers reporting over the next few weeks could propel the sector upward.
Sector Prospects Bright, Small Banks to Gain
Banks are poised to gain from two key tailwinds in the near future. Firstly, the Fed is likely to speed up the pace of rate hikes this year which will results in higher margins for the banks. Secondly, the President-elect has made a promise to deregulate the banking sector, one which he is likely to keep given the large number of prominent bankers finding place in his administration.
Meanwhile, smaller banks are likely to reap the benefits of the Fed’s attempts to reduce the sector’s risk ahead of the presidential handover. According to the final standard issued by the central bank, large banks will have to hold a minimum level of total loss absorbing capacity. This increase in capitalization is designed at protecting depositors from steep losses. Meanwhile, banks with less than $250 billion in assets will be exempt from these norms, a rule which is likely to push up their stock prices relatively higher.
Our Choices
Banks have already been moving higher since election results were announced. Promising earnings results will only push the sector’s stocks higher even as the new administration holds out the promise of deregulation.
Additionally, the Fed is projected to raise rates at a faster pace which will boost bank margins. Picking bank stocks is an extremely prudent option in such a scenario. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
UMB Financial Corporation (UMBF - Free Report) is a bank holding company which is engaged in providing complete banking, asset management, health spending solutions and related financial services
UMB Financial has a Zacks Rank #1 (Strong Buy). The company has expected earnings growth of 12% for the current year. Its earnings estimate for the current year has improved by 1% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 25.The average quarterly EPS Surprise for the stock is 10.2% while the previous EPS surprise is 9.6%.
Hancock Holding Company is a bank holding as well as financial holding company.
Hancock Holding’s expected earnings growth for the current year is 35.2%. Its earnings estimate for the current year has improved by 9.1% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 17. The average quarterly EPS Surprise for the stock is 33.6% while the previous EPS surprise is 34.1%. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
State Street Corporation (STT - Free Report) is a financial holding company. The company primarily performs its business through its principal banking subsidiary, State Street Bank.
State Street Corp has a Zacks Rank #2 (Buy). The company has expected earnings growth of 13.8% for the current year. Its earnings estimate for the current year has improved by 1.4% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 25. The average quarterly EPS Surprise for the stock is 9.2% while the previous EPS surprise is 15.9%.
Citigroup Inc.’s (C - Free Report) organic growth remains a key strength, as reflected by its revenue growth story. Moreover, the company’s streamlining activities are on an upswing.
Citigroup has a Zacks Rank #2. The company has expected earnings growth of 10.7% for the current year. Its earnings estimate for the current year has improved by 1.4% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 18. The average quarterly EPS Surprise for the stock is 9.2% while the previous EPS surprise is 15.9%.
The Bank of New York Mellon Corporation’s (BK - Free Report) dedicated global reach, the company’s diversified product mix and inorganic growth opportunities will improve profitability going forward. Further, cost-saving initiatives will help sustain earnings momentum
Bank of New York Mellon has a Zacks Rank #2. The company has expected earnings growth of 10.5% for the current year. Its earnings estimate for the current year has improved by 1.5% over the last 30 days. The company is expected to report fourth quarter earnings on Jan 19. The average quarterly EPS Surprise for the stock is 6.9% while the previous EPS surprise is 1.3%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>