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Bull of the Day: Wintrust Financial (WTFC)

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Wintrust Financial (WTFC - Free Report) is a Zacks Rank #1 (Strong Buy) is a financial holding company that operates in Community Banking, Specialty Finance, and Wealth Management.

The stock has been trading sideways in a 10-point range as of late. The 200-day moving average gas been a magnet, but the momentum in earnings estimates has been trending higher.

As we head into next year, interest rates are likely to stay elevated. This allows banks, more specifically regional banks, to be more profitable.

So can WTFC head higher in 2023? Let us dig into the stock.

About the Company

Wintrust was founded in 1994 and is headquartered in Rosemont, IL.The company operates 173 banking facilities and 228 ATMs in the Chicago metropolitan area, southern Wisconsin, northwest Indiana, and Florida.

Wintrust has a market cap just over $5 Billion and has a Forward PE of 10. The company was founded in 1991, employs over 5,000 and pays a dividend of 1.6%

Q3 Earnings Beat

In October, the company posted a 4.7% beat on earnings and beat on revenues. EPS for Q3 came in at $2.21 v the $2.11 and revenues were $503M v the $499M.

Revenues were up 18% year over year and loan growth increased by 12%.

This was the eight straight beat in the last ten quarters, a streak that has seen the stock almost double since 2020.

Analyst Estimates

The stock has seen earnings estimates drift higher over the last 60 days. For the current quarter, estimates have gone from $2.36 to $2.61 or 10%. For the current year, they have increased from $7.99 to $8.39 or 5%.

While estimates are going higher, analysts are also taking their price targets up. RBC has the stock at an outperform and a $115 target. Wedbush also is at an Outperform and $105 target.

The Technicals

While most stocks are down on the year, Wintrust is about flat. It has been a wild ride in 2022, with the stock trading in a range from $76 to $105, but WTFC always seems to come back to the mid-$80 level. This is basically where the 200-day moving average has been all year.

The key to this stock will of course be continued earnings momentum. But looking at the chart, the bulls need to get back over the $95 level. This would take the stock back to November highs and likely bring some bullish interest.

For those looking for a bargain, they should eye the bottom of the range on any market sell off. This would be in the low $80 area, between $80-82.

Bottom Line

Getting exposure to financials with interest rates elevated will be a theme in 2023. Investors should look at regional banks, as positive earnings momentum is likely to move the needle more than larger banks.

While the stock might have gone sideways all year, Wintrust could be a big winner in 2023. Look for momentum to continue and for the stock to get a technical breakout over $95.


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