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Fifth Third (FITB) Rises 36.8% YTD: What's Driving the Stock?
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Shares of Fifth Third Bancorp (FITB - Free Report) have rallied 36.8% year to date compared with the S&P 500 and the industry’s growth of 3.9% and 18.4%, respectively. This impressive price performance is backed by the bank’s diverse revenue base, rising loan and deposit balances as well as enhanced capital-deployment initiatives. Also, the company’s improving debt level and credit quality continue to support its financials.
Further, increased optimism driven by an accelerated recovery of the banking industry, aided by an extensive vaccination drive, additional government spending and an expectation of robust economic growth favored the company’s price performance.
Moreover, this Zacks Rank #2 (Buy) stock has been witnessing upward earnings estimate revisions. Over the past 30 days, the Zacks Consensus Estimate for 2021 and 2022 moved 2.1% and 1.6% north, respectively.
The following factors are likely to support Fifth Third’s steady price appreciation.
Factors in Detail
The key source of Fifth Third’s earnings stability is its diverse business profile. Over the past few years, the company has completed several opportunistic transactions, which have enabled it to offer a wider range of products and services. Further, Project North Star and MB Financial’s buyout are likely to consistently result in revenue growth, cost savings and operational excellence. The company is likely to continue pursuing opportunistic deals, which are strategic fits and help diversify its revenues .It also remains focused on executing measures such as branch consolidation.
Further, Fifth Third continues to benefit from its solid deposit base, which has been growing for the past few years. It continues to concentrate on core deposit growth in retail and commercial franchises. The bank’s total deposits, and loans and leases witnessed a compound annual growth rate (CAGR) of 11.3% and 4.3%, respectively, over the last five years ending 2020. Also, with the consistent resurgence of the economy and business activities, deposit balance is likely to continue growing and strengthen the bank’s liquidity position.
Fifth Third’s capital-deployment activities are notable. In February 2020, the bank raised its quarterly common stock dividend by 12.5%. Apart from this, it has a share-repurchase program in place. Following the Federal Reserve’s approval to buy back shares (which was suspended in mid-March 2020) beginning first-quarter 2021, the company is seeking to execute repurchases with outstanding authority of up to $180 million. Hence, Fifth Third’s capital deployments seem viable on the back its solid earnings performance in the past few quarters and a robust balance-sheet position.
As of Dec 31, 2020, the company held debt worth $16.5 billion and a debt-to-capital ratio of 39.3, both of which have recorded a decline over the past few quarters. Further, cash and cash equivalents were $3.15 billion, as of the same date. Thus, given its sound liquidity profile, we believe Fifth Third will be able to meet debt obligations even if the economic situation worsens.
Additionally, Fifth Third’s credit quality continues to normalize as it has taken aggressive actions to lower credit risk in the last few years. Additionally, in sync with its strategy to reduce earnings volatility, particularly given the current environment, the company shrunk exposures in certain segments like commodity trading. Hence, with the gradual recovery of the economy, the credit quality is anticipated to improve further in the quarters ahead.
Other Stocks to Consider
Western Alliance Bancorporation’s (WAL - Free Report) earnings estimate for the current year has moved north in 30 days’ time. Further, the company’s shares have surged 190.9% over the past six months. At present, it flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cowen Group, Inc. has recorded upward earnings estimate revision for the current year in the past 30 days. This Zacks #1 Ranked stock has appreciated 113.4% in six months’ time.
JPMorgan Chase & Co. (JPM - Free Report) has witnessed upward earnings estimate revisions for 2021 over the past 30 days. Moreover, this Zacks Rank #2 stock has gained 58.7% over the past six months.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Fifth Third (FITB) Rises 36.8% YTD: What's Driving the Stock?
Shares of Fifth Third Bancorp (FITB - Free Report) have rallied 36.8% year to date compared with the S&P 500 and the industry’s growth of 3.9% and 18.4%, respectively. This impressive price performance is backed by the bank’s diverse revenue base, rising loan and deposit balances as well as enhanced capital-deployment initiatives. Also, the company’s improving debt level and credit quality continue to support its financials.
Further, increased optimism driven by an accelerated recovery of the banking industry, aided by an extensive vaccination drive, additional government spending and an expectation of robust economic growth favored the company’s price performance.
Moreover, this Zacks Rank #2 (Buy) stock has been witnessing upward earnings estimate revisions. Over the past 30 days, the Zacks Consensus Estimate for 2021 and 2022 moved 2.1% and 1.6% north, respectively.
The following factors are likely to support Fifth Third’s steady price appreciation.
Factors in Detail
The key source of Fifth Third’s earnings stability is its diverse business profile. Over the past few years, the company has completed several opportunistic transactions, which have enabled it to offer a wider range of products and services. Further, Project North Star and MB Financial’s buyout are likely to consistently result in revenue growth, cost savings and operational excellence. The company is likely to continue pursuing opportunistic deals, which are strategic fits and help diversify its revenues .It also remains focused on executing measures such as branch consolidation.
Further, Fifth Third continues to benefit from its solid deposit base, which has been growing for the past few years. It continues to concentrate on core deposit growth in retail and commercial franchises. The bank’s total deposits, and loans and leases witnessed a compound annual growth rate (CAGR) of 11.3% and 4.3%, respectively, over the last five years ending 2020. Also, with the consistent resurgence of the economy and business activities, deposit balance is likely to continue growing and strengthen the bank’s liquidity position.
Fifth Third’s capital-deployment activities are notable. In February 2020, the bank raised its quarterly common stock dividend by 12.5%. Apart from this, it has a share-repurchase program in place. Following the Federal Reserve’s approval to buy back shares (which was suspended in mid-March 2020) beginning first-quarter 2021, the company is seeking to execute repurchases with outstanding authority of up to $180 million. Hence, Fifth Third’s capital deployments seem viable on the back its solid earnings performance in the past few quarters and a robust balance-sheet position.
As of Dec 31, 2020, the company held debt worth $16.5 billion and a debt-to-capital ratio of 39.3, both of which have recorded a decline over the past few quarters. Further, cash and cash equivalents were $3.15 billion, as of the same date. Thus, given its sound liquidity profile, we believe Fifth Third will be able to meet debt obligations even if the economic situation worsens.
Additionally, Fifth Third’s credit quality continues to normalize as it has taken aggressive actions to lower credit risk in the last few years. Additionally, in sync with its strategy to reduce earnings volatility, particularly given the current environment, the company shrunk exposures in certain segments like commodity trading. Hence, with the gradual recovery of the economy, the credit quality is anticipated to improve further in the quarters ahead.
Other Stocks to Consider
Western Alliance Bancorporation’s (WAL - Free Report) earnings estimate for the current year has moved north in 30 days’ time. Further, the company’s shares have surged 190.9% over the past six months. At present, it flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cowen Group, Inc. has recorded upward earnings estimate revision for the current year in the past 30 days. This Zacks #1 Ranked stock has appreciated 113.4% in six months’ time.
JPMorgan Chase & Co. (JPM - Free Report) has witnessed upward earnings estimate revisions for 2021 over the past 30 days. Moreover, this Zacks Rank #2 stock has gained 58.7% over the past six months.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>