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Which is a Better Banking Stock: Zions or SVB Financial?
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Zions Bancorporation (ZION - Free Report) and SVB Financial Group are two regional bank stocks with market capitalization of $8.85 billion and $9.27 billion, respectively. Both are part of the Banks-West industry, which has a Zacks Industry Rank #19 (top 7%).
As both banks are based in the same region, they are influenced by the same economic backdrop, which was recently hit by a slump in oil prices. Nonetheless, with the gradually stabilizing energy sector, rebound in oil prices has led to an improvement in their financials.
Over the last one year, Zions’ shares jumped 111.6% while SVB Financial surged 114.8%. They outperformed the Zacks categorized Banks-West industry’s gain of 61.4% for the same time frame.
Though the business of both the banks is almost similar, let’s dig deeper into to the financials, before deciding which one is a better investment option.
Zions
Zions, headquartered in Salt Lake City, UT, is a diversified financial service provider, operating a widespread network of more than 450 banking offices. It provides a full range of traditional banking services and is a national leader in small business administration lending, public finance advisory and electronic bond trading.
Zions has a trailing 12-month Return on Equity (ROE) of 6.80%, compared with the industry average of 8.97%. This shows it is less efficient in reinvesting its earnings.
Nonetheless, Zions’ debt/equity ratio stands at 0.08, compared with the industry average of 0.17, indicating a relatively lower debt burden. This is reflective of the financial stability of the company, even in adverse economic conditions.
Apart from this, Zions stock looks undervalued with respect to its Price-to-Earnings (P/E) and Price-to-Book (P/B) ratios. It has a P/E ratio of 17.88, compared with the industry average of 18.31. Also, the company’s P/B ratio of 1.27 is below the industry average of 1.78. Moreover, it has a Value Score of ‘B’.
Additionally, the bank’s current-year earnings are projected to grow 22.5%, while sales are expected to increase 7.8%.
Also, analysts seem optimistic about the stock’s earnings performance. Over the last 30 days, the stock witnessed 11 upward revisions (against three downward revisions) for 2017. The Zacks Consensus Estimate rose 3.4% to $2.44 for 2017.
Zions carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Value Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
SVB Financial
SVB Financial, based in Santa Clara, CA, is a diversified financial services company. It operates through, among others, the Silicon Valley Bank, its primary subsidiary. It provides a wide range of banking and financial products and services.
SVB Financial has a trailing 12-month ROE of 10.45%, compared with the industry average of 8.97%. This shows it reinvests its earnings more efficiently.
However, SVB Financial stock looks overvalued with respect to its P/E and P/B ratios. It has a P/E ratio of 20.89, compared with the industry average of 18.31. Also, the company’s P/B of 2.48 is above the industry average of 1.78.
Also, SVB Financial’s debt/equity ratio stands at 0.21, compared with the industry average of 0.17, indicating a relatively higher debt burden.
Nevertheless, the bank’s earnings for the current year are projected to be 16.23%, while sales growth is estimated to be 13.42%.
Moreover, analysts seem optimistic about the stock’s earnings prospects. Over the last 30 days, the stock has witnessed six upward revisions (against two downward revisions) for 2017. The Zacks Consensus Estimate increased 1.2% to $8.50 for 2017.
While SVB Financial looks better positioned in terms of ROE and sales growth expectations, Zions’ lesser debt burden compared with the market, along with better earnings growth potential, a Zacks Rank #2 and Value Score of ‘B,’ makes it a better pick.
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Which is a Better Banking Stock: Zions or SVB Financial?
Zions Bancorporation (ZION - Free Report) and SVB Financial Group are two regional bank stocks with market capitalization of $8.85 billion and $9.27 billion, respectively. Both are part of the Banks-West industry, which has a Zacks Industry Rank #19 (top 7%).
As both banks are based in the same region, they are influenced by the same economic backdrop, which was recently hit by a slump in oil prices. Nonetheless, with the gradually stabilizing energy sector, rebound in oil prices has led to an improvement in their financials.
Over the last one year, Zions’ shares jumped 111.6% while SVB Financial surged 114.8%. They outperformed the Zacks categorized Banks-West industry’s gain of 61.4% for the same time frame.
Though the business of both the banks is almost similar, let’s dig deeper into to the financials, before deciding which one is a better investment option.
Zions
Zions, headquartered in Salt Lake City, UT, is a diversified financial service provider, operating a widespread network of more than 450 banking offices. It provides a full range of traditional banking services and is a national leader in small business administration lending, public finance advisory and electronic bond trading.
Zions has a trailing 12-month Return on Equity (ROE) of 6.80%, compared with the industry average of 8.97%. This shows it is less efficient in reinvesting its earnings.
Nonetheless, Zions’ debt/equity ratio stands at 0.08, compared with the industry average of 0.17, indicating a relatively lower debt burden. This is reflective of the financial stability of the company, even in adverse economic conditions.
Apart from this, Zions stock looks undervalued with respect to its Price-to-Earnings (P/E) and Price-to-Book (P/B) ratios. It has a P/E ratio of 17.88, compared with the industry average of 18.31. Also, the company’s P/B ratio of 1.27 is below the industry average of 1.78. Moreover, it has a Value Score of ‘B’.
Additionally, the bank’s current-year earnings are projected to grow 22.5%, while sales are expected to increase 7.8%.
Also, analysts seem optimistic about the stock’s earnings performance. Over the last 30 days, the stock witnessed 11 upward revisions (against three downward revisions) for 2017. The Zacks Consensus Estimate rose 3.4% to $2.44 for 2017.
Zions carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Value Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
SVB Financial
SVB Financial, based in Santa Clara, CA, is a diversified financial services company. It operates through, among others, the Silicon Valley Bank, its primary subsidiary. It provides a wide range of banking and financial products and services.
SVB Financial has a trailing 12-month ROE of 10.45%, compared with the industry average of 8.97%. This shows it reinvests its earnings more efficiently.
However, SVB Financial stock looks overvalued with respect to its P/E and P/B ratios. It has a P/E ratio of 20.89, compared with the industry average of 18.31. Also, the company’s P/B of 2.48 is above the industry average of 1.78.
Also, SVB Financial’s debt/equity ratio stands at 0.21, compared with the industry average of 0.17, indicating a relatively higher debt burden.
Nevertheless, the bank’s earnings for the current year are projected to be 16.23%, while sales growth is estimated to be 13.42%.
Moreover, analysts seem optimistic about the stock’s earnings prospects. Over the last 30 days, the stock has witnessed six upward revisions (against two downward revisions) for 2017. The Zacks Consensus Estimate increased 1.2% to $8.50 for 2017.
SVB Financial has a Value Score of ‘D’ and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our Take
While SVB Financial looks better positioned in terms of ROE and sales growth expectations, Zions’ lesser debt burden compared with the market, along with better earnings growth potential, a Zacks Rank #2 and Value Score of ‘B,’ makes it a better pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>