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Is it Wise to Hold on to BOK Financial (BOKF) Stock Now?

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BOK Financial Corporation (BOKF - Free Report) continues to benefit from solid organic growth and robust balance sheet position. However, mounting expenses and low rate environment are major near-term concerns.

BOK Financial’s loan growth has been decent over the past few years. It has been able to record continued loan growth on increase in commercial and consumer loans with a compound annual growth rate (CAGR) of 7.9% in the last five years (2016-2020). Moreover, deposits escalated at five-year CAGR of 12.3% in 2020. Given the continuation of such trend on improving economic conditions, the company is well poised for organic growth.

The company has a strong balance sheet position. As of Mar 31, 2021, it had debt worth $2.8 billion and debt-to-capital ratio of 0.27, both of which declined over the past several quarters. Also, cash and due from banks of $1.4 billion witnessed an upward trend over the same time period. Furthermore, with an improving times interest earned ratio of 19.1, we believe that the company seems to be well positioned in terms of its liquidity profile and hence is might be able to continue meeting debt obligations in the near term, if the economic situation worsens.

Improved asset quality trends at BOK Financial are encouraging. Though provisions escalated in 2020 on coronavirus concerns, the same is expected to be reversed in 2021. Notably, management is of the opinion that if the economy continues to improve and oil price remains stable this year, additional loan loss reserve release is possible.

However, the company’s escalating operating expenses are a cause of concern. The same witnessed a 4.5% over the last five years (2016-2020) due to a rise in almost all the components. Any further escalation in costs could cause operational inefficiency and might hinder bottom-line expansion in the near term.

Also, net interest margin remains under pressure due to the low rate environment. Moreover, BOK Financial’s debt/equity ratio seems unfavorable compared with the broader industry. Furthermore, the company’s performance in the past few quarters has been quite fluctuating. Hence, we believe that the bank’s capital-deployment activities might not be sustainable.

The Zacks Consensus Estimate for earnings has been revised 1.1% upward for 2021 over the past month.

Also, shares of this Zacks Rank #3 (Hold) company have gained 35.1% over the past six months compared with the 48.5% growth recorded by the industry.

Stocks to Consider

UMB Financial Corporation (UMBF - Free Report) has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has jumped nearly 44% in the past six months. It currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

HarborOne Bancorp, Inc. (HONE - Free Report) has recorded upward earnings estimate revision for 2021 over the past 30 days. The stock, which has surged 42.8% over the past six months, currently carries a Zacks Rank #1.

Synovus Financial (SNV - Free Report) has witnessed upward earnings estimate revision for the current year in the past 60 days. Shares of the company have rallied 67.9% over the past six months. At present, it carries a Zacks Rank of 1.

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