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Bull of the Day: First Citizens BancShares (FCNCA)
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Zacks Rank #1 (Strong Buy) stock First Citizen’s Bancshares ((FCNCA - Free Report) ) is a North Carolina-based anomaly in the beaten-down banking sector. Early in the year, the Federal Reserve caught several regional banks off guard by raising interest rates at an unprecedented rate to quell inflation concerns (inflation was at 40-year highs at the time). Though the banking sector normally benefits from higher rates, several banks (particularly regional banks) were caught flat-footed. As Warren Buffett warns, “Only when the tide goes out do you learn who has been swimming naked.” As the contagion spread, several banks, such as Silicon Valley Bank, Signature Bank of New York, and Credit Suisse, began to go under. First Citizen’s Bank did not come out unscathed – from February to March the stock got hammered from $800 to $500.
Image Source: Zacks Investment Research
Silicon Valley Bank Collapse: Crisis Equals Opportunity
What happened next would change the trajectory of the company. As you can see on the chart above, First Citizen’s Bank reversed course and is now at $1285 per share. In late 2022, Silicon Valley Bank, a publicly traded bank from California, began to incur significant losses due to rapid interest rate hikes. To make matters worse, as the name implies, Silicon Valley was heavily reliant on the tech industry for deposits. As the Nasdaq corrected and tech funding dried up, SVB incurred billions in losses. Finally, the FDIC stepped in to remedy the situation. The result? The FDIC sold off SVB’s assets to a variety of banks. With the help of the FDIC, FCNCA purchased more than $100 billion in deposits and more than $70 billion in loans from SVB at a more than $16 billion discount.
By the Numbers
Amidst a troubled banking sector backdrop, First Citizen’s Bank stands alone. FCNCA is dominating its industry from a historical EPS growth rate, projected sales growth, and margins perspective.
Image Source: Zacks Investment Research
Furthermore, analysts believe that the SVB acquisition will be a significant earnings driver. Over the next two quarters, Zacks Consensus Estimates suggest robust triple-digit earning’s growth.
Image Source: Zacks Investment Research
Not only are analysts bullish, they are becoming more bullish by the day. The Zacks Consensus Estimate Trend shows Q1 EPS estimates of 21.78 per share 60 days ago and revised estimates of 47.98 per share now.
Image Source: Zacks Investment Research
Firm Price and Volume Action
In late March, FCNCA gapped higher by more than 50% on volume ~900% above the norm. The flurry of buying pressure is indicative of institutional accumulation. Since the news broke, shares have rallied in a stair-stepping fashion and are consolidating in a tight range – indicating that investors are in no rush to sell shares.
Because stocks tend to leave consolidations in the direction they came into them, the odds favor a trend continuation in shares of FCNCA.
Image Source: Zacks Investment Research
Conclusion
First Citizen’s Bancshares is a rare case of a bank successfully navigating the recent banking crisis. The purchase of Silicon Valley Bank for pennies on the dollar should be a fundamental catalyst for years to come. Furthermore, FCNCA is up 67% year-to-date, while the banking industry is down 15%. This makes one wonder how strong it will be if the banking sector continues to stabilize. Expect shares to be higher over the next 6-12 months.
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Bull of the Day: First Citizens BancShares (FCNCA)
Zacks Rank #1 (Strong Buy) stock First Citizen’s Bancshares ((FCNCA - Free Report) ) is a North Carolina-based anomaly in the beaten-down banking sector. Early in the year, the Federal Reserve caught several regional banks off guard by raising interest rates at an unprecedented rate to quell inflation concerns (inflation was at 40-year highs at the time). Though the banking sector normally benefits from higher rates, several banks (particularly regional banks) were caught flat-footed. As Warren Buffett warns, “Only when the tide goes out do you learn who has been swimming naked.” As the contagion spread, several banks, such as Silicon Valley Bank, Signature Bank of New York, and Credit Suisse, began to go under. First Citizen’s Bank did not come out unscathed – from February to March the stock got hammered from $800 to $500.
Image Source: Zacks Investment Research
Silicon Valley Bank Collapse: Crisis Equals Opportunity
What happened next would change the trajectory of the company. As you can see on the chart above, First Citizen’s Bank reversed course and is now at $1285 per share. In late 2022, Silicon Valley Bank, a publicly traded bank from California, began to incur significant losses due to rapid interest rate hikes. To make matters worse, as the name implies, Silicon Valley was heavily reliant on the tech industry for deposits. As the Nasdaq corrected and tech funding dried up, SVB incurred billions in losses. Finally, the FDIC stepped in to remedy the situation. The result? The FDIC sold off SVB’s assets to a variety of banks. With the help of the FDIC, FCNCA purchased more than $100 billion in deposits and more than $70 billion in loans from SVB at a more than $16 billion discount.
By the Numbers
Amidst a troubled banking sector backdrop, First Citizen’s Bank stands alone. FCNCA is dominating its industry from a historical EPS growth rate, projected sales growth, and margins perspective.
Image Source: Zacks Investment Research
Furthermore, analysts believe that the SVB acquisition will be a significant earnings driver. Over the next two quarters, Zacks Consensus Estimates suggest robust triple-digit earning’s growth.
Image Source: Zacks Investment Research
Not only are analysts bullish, they are becoming more bullish by the day. The Zacks Consensus Estimate Trend shows Q1 EPS estimates of 21.78 per share 60 days ago and revised estimates of 47.98 per share now.
Image Source: Zacks Investment Research
Firm Price and Volume Action
In late March, FCNCA gapped higher by more than 50% on volume ~900% above the norm. The flurry of buying pressure is indicative of institutional accumulation. Since the news broke, shares have rallied in a stair-stepping fashion and are consolidating in a tight range – indicating that investors are in no rush to sell shares.
Because stocks tend to leave consolidations in the direction they came into them, the odds favor a trend continuation in shares of FCNCA.
Image Source: Zacks Investment Research
Conclusion
First Citizen’s Bancshares is a rare case of a bank successfully navigating the recent banking crisis. The purchase of Silicon Valley Bank for pennies on the dollar should be a fundamental catalyst for years to come. Furthermore, FCNCA is up 67% year-to-date, while the banking industry is down 15%. This makes one wonder how strong it will be if the banking sector continues to stabilize. Expect shares to be higher over the next 6-12 months.