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7 Reasons Why Zions Stock is an Attractive Choice Right Now
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Zions Bancorporation (ZION - Free Report) is a solid bet now, on the back of its growth strategies, driven by increasing loans and strong deposit mix. The bank’s focus on enhanced capital deployment plans is also encouraging.
Apart from these, several macroeconomic factors including rising rates and prospects of lesser regulations are expected to support Zions’ financials. Given the optimism, analysts are also bullish on the stock. For 2017, the Zacks Consensus Estimate has been revised upward over the last 60 days, with six estimates moving higher and one moving lower.
Revenue Strength: Zions’ net revenue has risen at a CAGR of 2.7% in the last four years (2013–2016), driven by consistent growth in loans. With favorable macroeconomic developments and continued rise in demand for loans, the bank should witness further increase in revenues. The company’s projected sales growth (F1/F0) of 8.7% ensures continuation of the upward revenue trend.
Earnings per Share (EPS) Growth: Zions has witnessed nearly 32.7% rise in earnings per share for the last three to five years. Further, this earnings momentum will likely continue in the near term, as reflected by the company’s projected EPS growth rate (F1/F0) of 27.9% compared with industry average of 11.1%.
Also, the company’s long-term (three to five years) estimated EPS growth rate of 9.3% promises rewards for investors.
Focus on Cost Control: Zions has been successful in lowering its non-interest expenses through several initiatives, with the same falling at four year (2013–2016) CAGR of 2.6%. Despite projecting 2–3% year-over-year rise in adjusted non-interest expenses in 2017, management remains committed to drive efficiency ratio to low 60s.
Impressive Capital Deployment Activities: Driven by its capital strength, Zions’ capital deployment activities are impressive. In addition, the company has been lowering its preferred equity with an aim to further augment the return on equity and strengthen its balance sheet.
Also, last week, the company along with other 33 major banks including JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) and KeyCorp (KEY - Free Report) cleared this year’s stress test. Now, a dividend hike and a rise in share buyback authorization seem to be in the offing.
Strong Leverage: Zions’ debt/equity ratio is 0.05 versus the industry average of 0.18, indicating a relatively lower debt burden. It also indicates the company’s financial stability even in adverse economic conditions.
Stock Seems Undervalued: With respect to Price-to-Book (P/B) and PEG ratios, Zions looks relatively undervalued. The company’s P/B ratio of 1.22 is below the industry average of 1.66. Also, the PEG ratio for the company is 1.76 compared with industry average of 1.86.
Additionally, Zions has a Value Score of ‘B’. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with Zacks Rank #1 or #2, offer the best upside potential.
Favorable VGM Score: Currently, Zions has a VGM Score of ‘B’. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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7 Reasons Why Zions Stock is an Attractive Choice Right Now
Zions Bancorporation (ZION - Free Report) is a solid bet now, on the back of its growth strategies, driven by increasing loans and strong deposit mix. The bank’s focus on enhanced capital deployment plans is also encouraging.
Apart from these, several macroeconomic factors including rising rates and prospects of lesser regulations are expected to support Zions’ financials. Given the optimism, analysts are also bullish on the stock. For 2017, the Zacks Consensus Estimate has been revised upward over the last 60 days, with six estimates moving higher and one moving lower.
Further, Zions’ shares have surged 73.6% over the last one year, significantly outpacing the Zacks categorized West Banks industry’s rally of 42.2%. Currently, the stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here’s why Zions is a Solid Pick
Revenue Strength: Zions’ net revenue has risen at a CAGR of 2.7% in the last four years (2013–2016), driven by consistent growth in loans. With favorable macroeconomic developments and continued rise in demand for loans, the bank should witness further increase in revenues. The company’s projected sales growth (F1/F0) of 8.7% ensures continuation of the upward revenue trend.
Earnings per Share (EPS) Growth: Zions has witnessed nearly 32.7% rise in earnings per share for the last three to five years. Further, this earnings momentum will likely continue in the near term, as reflected by the company’s projected EPS growth rate (F1/F0) of 27.9% compared with industry average of 11.1%.
Also, the company’s long-term (three to five years) estimated EPS growth rate of 9.3% promises rewards for investors.
Focus on Cost Control: Zions has been successful in lowering its non-interest expenses through several initiatives, with the same falling at four year (2013–2016) CAGR of 2.6%. Despite projecting 2–3% year-over-year rise in adjusted non-interest expenses in 2017, management remains committed to drive efficiency ratio to low 60s.
Impressive Capital Deployment Activities: Driven by its capital strength, Zions’ capital deployment activities are impressive. In addition, the company has been lowering its preferred equity with an aim to further augment the return on equity and strengthen its balance sheet.
Also, last week, the company along with other 33 major banks including JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) and KeyCorp (KEY - Free Report) cleared this year’s stress test. Now, a dividend hike and a rise in share buyback authorization seem to be in the offing.
Strong Leverage: Zions’ debt/equity ratio is 0.05 versus the industry average of 0.18, indicating a relatively lower debt burden. It also indicates the company’s financial stability even in adverse economic conditions.
Stock Seems Undervalued: With respect to Price-to-Book (P/B) and PEG ratios, Zions looks relatively undervalued. The company’s P/B ratio of 1.22 is below the industry average of 1.66. Also, the PEG ratio for the company is 1.76 compared with industry average of 1.86.
Additionally, Zions has a Value Score of ‘B’. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with Zacks Rank #1 or #2, offer the best upside potential.
Favorable VGM Score: Currently, Zions has a VGM Score of ‘B’. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks "Strong Sells" absolutely free >>.