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Don't Sell BankUnited (BKU) Stock Now -- Here's Why
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On Jun 6, 2017, we issued an updated research report on BankUnited, Inc. (BKU - Free Report) . The company is well positioned to grow organically, supported by a strong balance sheet and capital position. However, elevated expenses and pressurized net interest margin are likely to hurt its profitability in the near term.
The concerns perhaps led to the shares of the company losing nearly 2.5% in the last one year, as against the Zacks categorized Banks - Major Regional industry’s growth of 24.3%.
Looking at the estimate revision trend, BankUnited’s current year earnings estimates have been revised nearly 1% upward in the last 30 days. As a result, the stock currently carries a Zacks Rank #3 (Hold).
Here are the reasons why you should hold the stock for now:
The company remains well positioned to grow both organically and through acquisitions, given its strong balance sheet position.
Moreover, it is trying to change its deposit mix by increasing the proportion of low-cost non-interest bearing deposits, which is likely to ease top-line pressure. Non-interest bearing demand deposits have grown at a four-year (2013–2016) CAGR of 10.9%.
However, operating expenses have been rising at a five-year (2012–2016) CAGR of 17.7%. In fact, expenses are likely to remain elevated in the near term, based on the expectations of a rise in funding costs and M&A activities.
Also, the company’s continuously declining NIM remains another concern. Though the Fed hiked the interest rates and there is optimism about the future rate scenario, NIM is expected to remain under stress owing to its liability-sensitive balance sheet.
Further, despite a rebound in the housing sector, BankUnited’s huge exposure to residential mortgage loans makes it prone to risks related to rising interest rates.
Stocks to Consider
Some better-ranked stocks in the finance space include Franklin Resources, Inc. (BEN - Free Report) , Comerica Incorporated (CMA - Free Report) and The PNC Financial Services Group, Inc. (PNC - Free Report) .
Franklin Resources has witnessed an upward earnings estimate revision of 6.7% for the current fiscal year in the last 60 days. Its share price has risen 23.3% in the last one year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica currently carries a Zacks Rank #2 (Buy). For the current year in the last 60 days, its Zacks Consensus Estimate has been revised 8.6% upward. Its share price has increased 50.5% in the last one year.
PNC Financial also carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 2.6% for the current year in the last 60 days, while its share price is up 35% in the last one year.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. See Zacks' Top 3 Stocks to Ride This Space >>
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Don't Sell BankUnited (BKU) Stock Now -- Here's Why
On Jun 6, 2017, we issued an updated research report on BankUnited, Inc. (BKU - Free Report) . The company is well positioned to grow organically, supported by a strong balance sheet and capital position. However, elevated expenses and pressurized net interest margin are likely to hurt its profitability in the near term.
The concerns perhaps led to the shares of the company losing nearly 2.5% in the last one year, as against the Zacks categorized Banks - Major Regional industry’s growth of 24.3%.
Looking at the estimate revision trend, BankUnited’s current year earnings estimates have been revised nearly 1% upward in the last 30 days. As a result, the stock currently carries a Zacks Rank #3 (Hold).
Here are the reasons why you should hold the stock for now:
The company remains well positioned to grow both organically and through acquisitions, given its strong balance sheet position.
Moreover, it is trying to change its deposit mix by increasing the proportion of low-cost non-interest bearing deposits, which is likely to ease top-line pressure. Non-interest bearing demand deposits have grown at a four-year (2013–2016) CAGR of 10.9%.
However, operating expenses have been rising at a five-year (2012–2016) CAGR of 17.7%. In fact, expenses are likely to remain elevated in the near term, based on the expectations of a rise in funding costs and M&A activities.
Also, the company’s continuously declining NIM remains another concern. Though the Fed hiked the interest rates and there is optimism about the future rate scenario, NIM is expected to remain under stress owing to its liability-sensitive balance sheet.
Further, despite a rebound in the housing sector, BankUnited’s huge exposure to residential mortgage loans makes it prone to risks related to rising interest rates.
Stocks to Consider
Some better-ranked stocks in the finance space include Franklin Resources, Inc. (BEN - Free Report) , Comerica Incorporated (CMA - Free Report) and The PNC Financial Services Group, Inc. (PNC - Free Report) .
Franklin Resources has witnessed an upward earnings estimate revision of 6.7% for the current fiscal year in the last 60 days. Its share price has risen 23.3% in the last one year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica currently carries a Zacks Rank #2 (Buy). For the current year in the last 60 days, its Zacks Consensus Estimate has been revised 8.6% upward. Its share price has increased 50.5% in the last one year.
PNC Financial also carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 2.6% for the current year in the last 60 days, while its share price is up 35% in the last one year.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. See Zacks' Top 3 Stocks to Ride This Space >>