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This Large-Cap Bank Is Separating Itself from the Herd
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Most financial stocks have had a rough go this year, as many banks and financial institutions have fallen victim to the recent regional banking stress. The SPDR S&P Regional Banking ETF (KRE - Free Report) , which targets the regional banking segment of the S&P Total Market Index and provides exposure to a mixture of large-cap, mid-cap, and small-cap banks, has fallen more than 33% this year.
While financial stocks have lagged the general market, several bigger banks have held up relatively well. We’ve seen this through past cycles when markets become turbulent. As feebler banks dissolve due to a weakening economic environment or mismanagement, the larger and better-capitalized banks typically benefit.
One glaring reason why we may want to consider banks in this environment is valuation. The Zacks Banks – Foreign industry group is currently ranked in the top 47% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months. The banks in this industry are relatively undervalued, and are projected to experience above-average earnings growth:
Image Source: Zacks Investment Research
Quantitative research studies have shown that approximately half of a stock’s price appreciation can be attributed to its industry group. By focusing on stocks within the top industries, we can dramatically improve our odds of success. Let’s take a look at a leading stock contained within this top industry group.
HSBC Holdings provides banking and financial services globally. The company’s Wealth and Personal Banking segment offers retail banking and wealth products such as checking and savings accounts, mortgages and personal loans, credit and debit cards, and private wealth solutions. The Commercial Banking segment provides credit and lending, treasury management, commercial insurance, and capital raising services. In addition to private investors, HSBC serves government, corporate, and institutional clients.
HSBC has exceeded earnings estimates in two of the past four quarters, delivering an average 7.62% earnings surprise over that timeframe. The financial company most recently posted first-quarter earnings earlier this month of $2.60/share, a 48.6% surprise over consensus estimates. The stock is outpacing the market, returning north of 28% this year alone.
Image Source: StockCharts
Analysts covering HSBC are in agreement in terms of earnings revisions and have raised estimates for the current fiscal year. EPS estimates for 2023 have surged 16.22% in the past 60 days. The Zacks Consensus Estimate is now $6.95/share, reflecting stellar growth of 87.8% relative to last year. Revenues are projected to climb 25.8% to $69.6 billion.
Image Source: Zacks Investment Research
If you’ve been looking for a financial stock that is outperforming the market, look no further.
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This Large-Cap Bank Is Separating Itself from the Herd
Most financial stocks have had a rough go this year, as many banks and financial institutions have fallen victim to the recent regional banking stress. The SPDR S&P Regional Banking ETF (KRE - Free Report) , which targets the regional banking segment of the S&P Total Market Index and provides exposure to a mixture of large-cap, mid-cap, and small-cap banks, has fallen more than 33% this year.
While financial stocks have lagged the general market, several bigger banks have held up relatively well. We’ve seen this through past cycles when markets become turbulent. As feebler banks dissolve due to a weakening economic environment or mismanagement, the larger and better-capitalized banks typically benefit.
One glaring reason why we may want to consider banks in this environment is valuation. The Zacks Banks – Foreign industry group is currently ranked in the top 47% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months. The banks in this industry are relatively undervalued, and are projected to experience above-average earnings growth:
Image Source: Zacks Investment Research
Quantitative research studies have shown that approximately half of a stock’s price appreciation can be attributed to its industry group. By focusing on stocks within the top industries, we can dramatically improve our odds of success. Let’s take a look at a leading stock contained within this top industry group.
HSBC Holdings (HSBC - Free Report)
HSBC Holdings provides banking and financial services globally. The company’s Wealth and Personal Banking segment offers retail banking and wealth products such as checking and savings accounts, mortgages and personal loans, credit and debit cards, and private wealth solutions. The Commercial Banking segment provides credit and lending, treasury management, commercial insurance, and capital raising services. In addition to private investors, HSBC serves government, corporate, and institutional clients.
HSBC has exceeded earnings estimates in two of the past four quarters, delivering an average 7.62% earnings surprise over that timeframe. The financial company most recently posted first-quarter earnings earlier this month of $2.60/share, a 48.6% surprise over consensus estimates. The stock is outpacing the market, returning north of 28% this year alone.
Image Source: StockCharts
Analysts covering HSBC are in agreement in terms of earnings revisions and have raised estimates for the current fiscal year. EPS estimates for 2023 have surged 16.22% in the past 60 days. The Zacks Consensus Estimate is now $6.95/share, reflecting stellar growth of 87.8% relative to last year. Revenues are projected to climb 25.8% to $69.6 billion.
Image Source: Zacks Investment Research
If you’ve been looking for a financial stock that is outperforming the market, look no further.