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Bear of the Day: Banc of California (BANC)

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With North Korean tensions dominating the headlines, investors are piling into safe havens. This is having a huge impact on Treasury bonds, pushing yields lower in the process.

It is also dulling the prospect of a rate hike by the Fed in the near term, and while we have seen a broad market sell-off a result, the impact has been especially poor for the financial sector. That is because this segment depends on a solid yield to fuel profits, and a risk-off environment doesn’t help that trend.

We can see a great example of that in many names in the financial space as of late, while some in particular have been suffering from longer term issues too. These types of companies—which are experiencing both short term woes and longer-term trouble—may make for poor investments in today’s environment, and investors may want to consider avoiding them in the near future. A great example of this is with Banc of California ((BANC - Free Report) ), today’s bear of the day.


Banc of California has a few major issues when we consider its fundamentals, including a poor recent history in earnings season. This includes two straight misses, something that is definitely indicative of a poor trend.

That isn’t all though, as the company is seeing sliding earnings and sales when compared to the year ago period, while analysts are increasingly bearish about the company’s future. This includes several analysts slashing estimates in the last month for both the current quarter and the current year, and also a complete lack of analyst estimate upgrades in these time periods.

We have also seen a huge cut to the consensus estimate as a result of these analyst downgrades. In just the past month, the consensus estimate has declined by nearly 40% for the coming quarter, and close to 30% for the full year. Clearly, the stock has earned its Zacks Rank #5 (Strong Sell) ranking and may be poised for more weakness in the future too.



This is especially true when you consider its sluggish fundamental stats as well. The company has a rare triple play with grades of ‘F’ for value, growth, and momentum. This gives BANC a VGM Score of ‘F’, making it a very poor score when you combine it with the bottom level Zacks Rank.

Other Choices

The financial sector overall is pretty weak, as the segment has a sector rank in the bottom half of the Zacks Sector Rank list. However, that doesn’t mean that every stock in this group is a ‘sell’. Instead, there are a few interesting choices in other areas of the regional bank segment that could still be solid picks, despite the headwinds.

One such name is Zions Bancorporation ((ZION - Free Report) ), a Zacks Rank #1 (Strong Buy) stock. This banking institution also has a better VGM score—including a Value Score of ‘B’—and is experiencing earnings growth this year too. As such, it might be a better choice for investors when compared to BANC, at least until BANC can get back on track from an earnings estimate and expectations perspective.


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