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4 Reasons to Invest in East West Bancorp (EWBC) Stock Now

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It seems to be a wise idea to add East West Bancorp, Inc. (EWBC - Free Report) stock to your portfolio now. Supported by decent growth in loans and deposit balances, the company remains on track for organic growth. Also, its efficient capital deployments indicate a solid balance sheet and liquidity position.

Moreover, analysts seem to be optimistic regarding the company’s earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 11.1% upward over the past 30 days. Thus, East West Bancorp currently carries a Zacks Rank #2 (Buy).

Looking at its price performance, shares of the company have gained 53.9% so far this year compared with 39.5% growth recorded by the industry.






Let’s check some of the other factors that make the stock an attractive pick right now.

Key Fundamentals

Earnings Growth: East West Bancorp witnessed earnings growth of 11.1% in the past three to five years, higher than the industry average of 10.2%. The upward momentum is likely to continue in the near term as reflected by the company’s projected earnings growth rate of 41.3% for 2021, higher than the industry’s 22.2%.

Further, its long-term (three to five years) estimated earnings growth rate of 10% promises rewards for investors.

Revenue Strength: The company’s organic growth trajectory looks impressive. While net interest income, which is the primary source of its revenues, declined in 2020 and the first quarter of 2021; the same witnessed a compound annual growth rate (CAGR) of 5.1% over the last four years (2017-2020). Continued growth in loans is expected to further support the top line in the near term. Over the last three years (2018-2020), total loans witnessed a CAGR of 8.5%.

Efficient Capital Deployments: East West Bancorp’s capital deployment activities seem impressive. In January 2021, the company hiked its quarterly dividend by 20%. This followed a 20% hike in April 2019, 15% in July 2018 and 11.1% in January 2015.

Also, the company has a share-repurchase plan in place, under which it had authorized the repurchase of up to $500 million worth of shares in March 2020. As of Mar 31, 2021, $354.1 million worth of shares were left to be repurchased. Given a solid capital position and earnings strength, the company’s capital deployment plan looks sustainable.

Superior Return on Equity (ROE): East West Bancorp has an ROE of 12.15%, higher than the industry average of 10.30%. This shows that the company reinvests its cash more efficiently compared with peers.

Other Stocks Worth Considering

A few other top-ranked stocks from the same space are mentioned below.

SVB Financial Group’s (SIVB - Free Report) Zacks Consensus Estimate for current-year earnings has been revised 32.5% upward over the past 60 days. Its shares have gained 66.5% over the past six months. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

First Republic Bank’s (FRC - Free Report) earnings estimates for the current year have been revised 7.1% upward over the past 60 days. The Zacks Ranked #2 stock has gained 41.8% over the past six months.

Washington Federal, Inc.’s (WAFD - Free Report) earnings estimates for the current fiscal year have moved up 7.7% over the past 60 days. Its share price has rallied 36.7% over the past six months. It currently carries a Zacks Rank of 2.

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