KeyCorp ( KEY Quick Quote KEY - Free Report) is well positioned for growth, backed by its robust balance sheet, acquisitions and improving loans and deposit balance despite concerns related to low interest rates and mounting costs. Further, the company’s solid capital deployments seem sustainable.
In addition, analysts are bullish on the stock’s prospects. Over the past 30 days, the Zacks Consensus Estimate for earnings has moved 13.8% and 3.7% north for 2021 and 2022, respectively. KeyCorp flaunts a Zacks Rank of 1 (Strong Buy), at present. You can see
. the complete list of today’s Zacks #1 Rank stocks here
Shares of the company have surged 51.5% over the past six months, outperforming the
industry’s rally of 50%.
Mentioned below are some major factors that make KeyCorp stock an attractive pick now.
Earnings Growth: The company has witnessed an earnings per share growth rate of 6.6% in the past three to five years. Furthermore, its earnings are projected to surge 70.6% in 2021. Besides, the company's earnings are anticipated to grow at a rate of 23% over the long term compared with the industry’s average of 11.50%.
Moreover, KeyCorp has a decent earnings surprise history. The company's earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 19.63%.
Revenue Strength: KeyCorp’s organic growth looks impressive. The company’s tax-equivalent revenues have witnessed a compound annual growth rate (CAGR) of 2.1% in the last four years (2017-2020), largely driven by a consistent rise in loans and deposits, and increase in fee income sources.
Also, the efforts to strengthen fee income are likely to keep driving KeyCorp’s top-line growth. This uptrend in revenues is anticipated to continue as reflected by the projected sales growth rate of 3.4% for 2021.
Strategic Acquisitions: KeyCorp has been engaged in a number of strategic buyouts, which reflects its solid balance sheet and liquidity position. The acquisition of AQN Strategies LLC in March is part of its efforts to employ data-driven approaches and expand customer reach. Earlier in 2019, KeyCorp acquired Laurel Road Bank’s digital lending operation. These, along with several other acquisitions, are anticipated to keep boosting its profitability and market share as well as help diversify revenues. Steady Capital Deployments: KeyCorp has sustainable capital-deployment activities. The company announced a new share-buyback plan worth up to $900 million shares for the first three quarters of 2021, while maintaining dividend payment at 18.5 cents per share. As of Mar 31, 2021, $765 million worth of shares were remaining under the buyback authorization. Solid Balance Sheet Position: As of Mar 31, 2021, the company had a total debt of $13.5 billion, and cash and due from banks worth $938 million. Notably, only a small portion of its total debt is short-term in nature. KeyCorp's times interest earned ratio of 9.2 at the end of first-quarter 2021 has improved sequentially. Thus, given the decent earnings strength, it will be able to continue meeting debt obligations even if the economic situation worsens. Superior Return on Equity (ROE): KeyCorp’s ROE is 11.06% compared with the industry average of 10.65%. This indicates that it reinvests its cash more efficiently than the industry. Valuation: KeyCorp looks undervalued when compared with the broader industry. Its current price/earnings (F1) of 10.73 and price/sales ratios of 3.01 are below the industry averages of 12.67 and 3.65, respectively. Other Stocks Worth Considering Commerce Bancshares, Inc. ( CBSH Quick Quote CBSH - Free Report) has witnessed an upward earnings estimate revision of 9.6% for the current year over the past 30 days. Its shares have gained 34.4% over the past six months. The company sports a Zacks Rank #1 at present. Synovus Financial Corp.’s ( SNV Quick Quote SNV - Free Report) 2021 earnings estimate has moved 14.3% north in the past 30 days. Over the past six months, shares of the company have rallied 64.3%. At present, it flaunts a Zacks Rank of 1. Hancock Whitney Corporation ( HWC Quick Quote HWC - Free Report) recorded an upward earnings estimate revision of 20.3% for the ongoing year in 30 days’ time. Shares of this bank have appreciated 81.5% over the past six months. The stock currently sports a Zacks Rank #1. Zacks Top 10 Stocks for 2021
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