Bank of the Ozarks announced a 2.8% hike in its quarterly cash dividend. The new dividend of 18.5 cents per share will be paid on Oct 20 to shareholders on record as of Oct 13.
This is the 29th consecutive quarterly increase in dividend by the bank. Based on yesterday’s closing price of $48.47 per share, the dividend yield is 1.53%.
Given a solid capital and liquidity position, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.
But is it worth considering Bank of the Ozarks stock, for earning this dividend income.
Let’s delve deeper into its financial performance and fundamentals to understand the risk and reward.
Driven by the de novo branching strategy as well as acquisitions, the company’s revenues have increased at a CAGR of 31.2% over the last five years (2012–2016). Its projected sales growth of 35.6% for the current year is significantly above the industry average of 0.6%.
Additionally, over the last three-five years, the company has witnessed earnings per share (EPS) growth of 25.3%. Also, it is expected to deliver strong earnings performance as indicated by its projected EPS growth of 15.5% for 2017 compared with the industry average of 10.3%.
Bank of the Ozarks displays strong financial leverage. Its debt/equity ratio of 0.12 compares favourably with the industry average of 0.31, indicating a lower debt burden relative to the industry.
While the stock looks worth investing, based on the above mentioned factors, you must consider the following downsides before taking the final decision.
Mounting non-interest expenses remains a major concern for the company. Over the last four years (2012–2016), expenses have increased at a CAGR of 22.3%. Moreover, as the company continues to expand inorganically and as a result of opening branches in newer areas, overall costs are expected to remain elevated in the quarters ahead.
Bank of the Ozarks’ stock looks overvalued based on its price-to-book (P/B) and price-to-cash flow (P/CF) ratios. The company currently has a P/B ratio of 1.89 and a P/CF ratio of 19.32, which is above the industry average of 1.47 and 15.91, respectively.
Moreover, the company’s shares have lost 7.9% year to date against 1.3% growth for the industry it belongs to.
Our Take
Just because Bank of the Ozarks has announced a dividend hike, we don’t think it will be wise to get excited about the stock. Elevated expenses and a stretched valuation make us apprehensive about the stock’s prospects.
Notably, its Zacks Consensus Estimate for the current-year earnings has also remained stable in the last 30 days. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A few better-ranked stocks in the same space worth considering are Home Bancorp, Inc. (HBCP - Free Report) , Synovus Financial Corp. (SNV - Free Report) and CenterState Bank Corporation .
The Zacks Consensus Estimate for Home Bancorp has remained stable for the current year, in the last 60 days. The company’s share price has increased nearly 50% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Synovus Financial witnessed a marginal upward earnings estimate revision for the current year, in the last 60 days. Its share price has surged 42.9% in the past year. It currently carries a Zacks Rank #2 (Buy).
CenterState Bank also carries a Zacks Rank #2. Its shares have gained more than 50% in a year and its earnings estimates have remained stable for the current year, in the last 60 days.
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Bank of the Ozarks announced a 2.8% hike in its quarterly cash dividend. The new dividend of 18.5 cents per share will be paid on Oct 20 to shareholders on record as of Oct 13.
This is the 29th consecutive quarterly increase in dividend by the bank. Based on yesterday’s closing price of $48.47 per share, the dividend yield is 1.53%.
Given a solid capital and liquidity position, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.
But is it worth considering Bank of the Ozarks stock, for earning this dividend income.
Let’s delve deeper into its financial performance and fundamentals to understand the risk and reward.
Driven by the de novo branching strategy as well as acquisitions, the company’s revenues have increased at a CAGR of 31.2% over the last five years (2012–2016). Its projected sales growth of 35.6% for the current year is significantly above the industry average of 0.6%.
Additionally, over the last three-five years, the company has witnessed earnings per share (EPS) growth of 25.3%. Also, it is expected to deliver strong earnings performance as indicated by its projected EPS growth of 15.5% for 2017 compared with the industry average of 10.3%.
Bank of the Ozarks displays strong financial leverage. Its debt/equity ratio of 0.12 compares favourably with the industry average of 0.31, indicating a lower debt burden relative to the industry.
While the stock looks worth investing, based on the above mentioned factors, you must consider the following downsides before taking the final decision.
Mounting non-interest expenses remains a major concern for the company. Over the last four years (2012–2016), expenses have increased at a CAGR of 22.3%. Moreover, as the company continues to expand inorganically and as a result of opening branches in newer areas, overall costs are expected to remain elevated in the quarters ahead.
Bank of the Ozarks’ stock looks overvalued based on its price-to-book (P/B) and price-to-cash flow (P/CF) ratios. The company currently has a P/B ratio of 1.89 and a P/CF ratio of 19.32, which is above the industry average of 1.47 and 15.91, respectively.
Moreover, the company’s shares have lost 7.9% year to date against 1.3% growth for the industry it belongs to.
Our Take
Just because Bank of the Ozarks has announced a dividend hike, we don’t think it will be wise to get excited about the stock. Elevated expenses and a stretched valuation make us apprehensive about the stock’s prospects.
Notably, its Zacks Consensus Estimate for the current-year earnings has also remained stable in the last 30 days. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A few better-ranked stocks in the same space worth considering are Home Bancorp, Inc. (HBCP - Free Report) , Synovus Financial Corp. (SNV - Free Report) and CenterState Bank Corporation .
The Zacks Consensus Estimate for Home Bancorp has remained stable for the current year, in the last 60 days. The company’s share price has increased nearly 50% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Synovus Financial witnessed a marginal upward earnings estimate revision for the current year, in the last 60 days. Its share price has surged 42.9% in the past year. It currently carries a Zacks Rank #2 (Buy).
CenterState Bank also carries a Zacks Rank #2. Its shares have gained more than 50% in a year and its earnings estimates have remained stable for the current year, in the last 60 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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