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HSBC Cost Containment Efforts on Track, Revenue Woes Linger
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HSBC Holdings plc’s (HSBC - Free Report) consistent focus on cost-saving initiatives will alleviate pressure on profitability. However, pressure on revenues is a major concern.
The company’s Zacks Consensus Estimate for the current-year earnings has remained stable over the past 60 days, while it moved marginally up for 2018. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Further, HSBC’s share price has increased 28% so far this year, outperforming the 20.6% rally for the industry it belongs to.
HSBC has been relying on various streamlining actions to cut expenses and focus on core businesses. The company is on track to divest its unprofitable/non-core operations to achieve its cost-saving target of $6 billion by the end of 2017.
Based on its stable capital position and lower debt equity ratio compared with the industry, HSBC has been consistently rewarding its shareholders. The company has share repurchase authorization worth $2 billion (to be completed by the end of 2017) in place. Also, it plans to keep the dividend payout ratio of 40-60% intact in the near term.
However, dismal European economic growth and weak loan demand are expected to lead to muted revenue growth. As growth is subdued in HSBC’s mature markets (Europe, the U.K, and the U.S.), revenue growth is likely to be muted in the near term.
Also, regulatory probes and litigations related to past business malpractices continue adversely impacting HSBC’s financials. Further, stringent regulations will likely keep the company’s financials under pressure.
A few top-ranked stocks from the same space are mentioned below.
KB Financial Group Inc. (KB - Free Report) has witnessed an upward earnings estimate revision of 15.1% for the current year over the past 60 days. Its share price has increased 57% so far this year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Credicorp Ltd. (BAP - Free Report) carries a Zacks Rank #2 (Buy). The stock has witnessed a marginal upward earnings estimate revision for the current year over the past 60 days. So far this year, the shares of the company have gained 31.9% year to date.
Shinhan Financial Group Co., Ltd.’s (SHG - Free Report) Zacks Consensus Estimate for the current year has been revised 8.5% upward over the past 60 days. Its shares have gained 17.3% year to date. It also carries a Zacks Rank #2.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
HSBC Cost Containment Efforts on Track, Revenue Woes Linger
HSBC Holdings plc’s (HSBC - Free Report) consistent focus on cost-saving initiatives will alleviate pressure on profitability. However, pressure on revenues is a major concern.
The company’s Zacks Consensus Estimate for the current-year earnings has remained stable over the past 60 days, while it moved marginally up for 2018. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Further, HSBC’s share price has increased 28% so far this year, outperforming the 20.6% rally for the industry it belongs to.
HSBC has been relying on various streamlining actions to cut expenses and focus on core businesses. The company is on track to divest its unprofitable/non-core operations to achieve its cost-saving target of $6 billion by the end of 2017.
Based on its stable capital position and lower debt equity ratio compared with the industry, HSBC has been consistently rewarding its shareholders. The company has share repurchase authorization worth $2 billion (to be completed by the end of 2017) in place. Also, it plans to keep the dividend payout ratio of 40-60% intact in the near term.
However, dismal European economic growth and weak loan demand are expected to lead to muted revenue growth. As growth is subdued in HSBC’s mature markets (Europe, the U.K, and the U.S.), revenue growth is likely to be muted in the near term.
Also, regulatory probes and litigations related to past business malpractices continue adversely impacting HSBC’s financials. Further, stringent regulations will likely keep the company’s financials under pressure.
A few top-ranked stocks from the same space are mentioned below.
KB Financial Group Inc. (KB - Free Report) has witnessed an upward earnings estimate revision of 15.1% for the current year over the past 60 days. Its share price has increased 57% so far this year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Credicorp Ltd. (BAP - Free Report) carries a Zacks Rank #2 (Buy). The stock has witnessed a marginal upward earnings estimate revision for the current year over the past 60 days. So far this year, the shares of the company have gained 31.9% year to date.
Shinhan Financial Group Co., Ltd.’s (SHG - Free Report) Zacks Consensus Estimate for the current year has been revised 8.5% upward over the past 60 days. Its shares have gained 17.3% year to date. It also carries a Zacks Rank #2.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>