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6 Factors That Make Bank OZK (OZK) Stock a Solid Bet Now
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Bank OZK (OZK - Free Report) is well-poised for growth on the back of business restructuring and branch consolidation efforts. The company’s solid loan balances and rising interest rates will keep aiding the top line. Thus, it seems to be a wise idea to add the stock to your portfolio now.
Analysts also seem bullish on the stock. The Zacks Consensus Estimate for OZK’s current-year earnings has been revised 7.2% upward over the past two months. The stock currently carries a Zacks Rank #2 (Buy).
Similar to other industry players, shares of OZK haven’t remained untouched by the recent sell-off in the broader markets. The company’s shares have lost 3.7% in the past three months compared with an 8.7% decline recorded by the industry. This makes an attractive entry point for investors.
Image Source: Zacks Investment Research
Here’s Why Bank OZK Stock is Worth a Look
Earnings Strength: Bank OZK’s earnings have grown at the rate of 5.9% over the last three to five years, driven by solid top-line performance and strategic business restructuring initiatives. The company’s earnings are expected to grow 0.5% in 2022 and 7.7% in 2023.
The company also has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.3%.
Revenue Growth: Bank OZK has grown substantially through de novo branching strategy and inorganically. Its revenues witnessed a compound annual growth rate of 9.4% over the last six years (2016-2021), mainly driven by steady loan growth and a rise in fee income.
Supported by higher interest rates, Bank OZK is expected to witness an improvement in net interest income in the quarters ahead. Given its strong balance sheet position, the bank is expected to continue expanding through acquisitions.
For 2022, the company’s revenues are expected to rise 7.4%, whereas, for 2023, it is projected to grow 8.9%.
Solid Balance Sheet: As of Jun 30, 2022, the company had total debt of $973.07 million and cash and cash equivalents of $1.14 billion. Thus, given a robust liquidity position and decent earnings strength, Bank OZK is expected to keep meeting debt obligations in the near term, even if the economic situation worsens.
Impressive Capital Deployments: Bank OZK has been regularly increasing its quarterly dividend. In July 2022, it hiked its dividend for the 48th consecutive quarter. Based on the last day’s closing price of $40.18, the dividend yield currently stands at 3.19%. Further, the stock has a five-year annualized dividend growth of 12.4% and a payout ratio of 29%. This is not only attractive to income investors but also represents a steady income stream.
OZK has a share repurchase plan in place. As of Jun 30, 2022, $177.6 million worth of shares were left to be repurchased. Given a robust capital position and lower debt equity and dividend payout ratios compared with peers, the company is expected to sustain its capital deployment activities.
Favorable Valuation: Bank OZK stock looks undervalued when compared with the broader industry. Its price/earnings and price/cash flow ratios are below the respective industry averages. OZK has a P/E (F1) ratio of 8.95 compared with the industry average of 9.52. Its P/CF ratio stands at 7.44, below the industry’s 8.30.
Superior Return on Equity (ROE): Bank OZK’s trailing 12-month ROE reflects its superiority in terms of utilizing shareholder funds compared with its peers. The company has an ROE of 12.42%, higher than the industry average of 11.63%.
The consensus estimate for Valley National Bancorp’s current fiscal year’s earnings has been revised 7.6% upward over the past 60 days. So far this year, VLY’s shares have lost 16.3%.
Community Bank System’s current-year earnings estimates have been revised 2.9% north over the past 60 days. CBU’s shares have lost 13% in the year-to-date period.
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6 Factors That Make Bank OZK (OZK) Stock a Solid Bet Now
Bank OZK (OZK - Free Report) is well-poised for growth on the back of business restructuring and branch consolidation efforts. The company’s solid loan balances and rising interest rates will keep aiding the top line. Thus, it seems to be a wise idea to add the stock to your portfolio now.
Analysts also seem bullish on the stock. The Zacks Consensus Estimate for OZK’s current-year earnings has been revised 7.2% upward over the past two months. The stock currently carries a Zacks Rank #2 (Buy).
Similar to other industry players, shares of OZK haven’t remained untouched by the recent sell-off in the broader markets. The company’s shares have lost 3.7% in the past three months compared with an 8.7% decline recorded by the industry. This makes an attractive entry point for investors.
Image Source: Zacks Investment Research
Here’s Why Bank OZK Stock is Worth a Look
Earnings Strength: Bank OZK’s earnings have grown at the rate of 5.9% over the last three to five years, driven by solid top-line performance and strategic business restructuring initiatives. The company’s earnings are expected to grow 0.5% in 2022 and 7.7% in 2023.
The company also has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.3%.
Revenue Growth: Bank OZK has grown substantially through de novo branching strategy and inorganically. Its revenues witnessed a compound annual growth rate of 9.4% over the last six years (2016-2021), mainly driven by steady loan growth and a rise in fee income.
Supported by higher interest rates, Bank OZK is expected to witness an improvement in net interest income in the quarters ahead. Given its strong balance sheet position, the bank is expected to continue expanding through acquisitions.
For 2022, the company’s revenues are expected to rise 7.4%, whereas, for 2023, it is projected to grow 8.9%.
Solid Balance Sheet: As of Jun 30, 2022, the company had total debt of $973.07 million and cash and cash equivalents of $1.14 billion. Thus, given a robust liquidity position and decent earnings strength, Bank OZK is expected to keep meeting debt obligations in the near term, even if the economic situation worsens.
Impressive Capital Deployments: Bank OZK has been regularly increasing its quarterly dividend. In July 2022, it hiked its dividend for the 48th consecutive quarter. Based on the last day’s closing price of $40.18, the dividend yield currently stands at 3.19%. Further, the stock has a five-year annualized dividend growth of 12.4% and a payout ratio of 29%. This is not only attractive to income investors but also represents a steady income stream.
OZK has a share repurchase plan in place. As of Jun 30, 2022, $177.6 million worth of shares were left to be repurchased. Given a robust capital position and lower debt equity and dividend payout ratios compared with peers, the company is expected to sustain its capital deployment activities.
Favorable Valuation: Bank OZK stock looks undervalued when compared with the broader industry. Its price/earnings and price/cash flow ratios are below the respective industry averages. OZK has a P/E (F1) ratio of 8.95 compared with the industry average of 9.52. Its P/CF ratio stands at 7.44, below the industry’s 8.30.
Superior Return on Equity (ROE): Bank OZK’s trailing 12-month ROE reflects its superiority in terms of utilizing shareholder funds compared with its peers. The company has an ROE of 12.42%, higher than the industry average of 11.63%.
Other Bank Stocks Worth Considering
A couple of other top-ranked banks are Valley National Bancorp (VLY - Free Report) and Community Bank System, Inc. (CBU - Free Report) . Both the stocks currently carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for Valley National Bancorp’s current fiscal year’s earnings has been revised 7.6% upward over the past 60 days. So far this year, VLY’s shares have lost 16.3%.
Community Bank System’s current-year earnings estimates have been revised 2.9% north over the past 60 days. CBU’s shares have lost 13% in the year-to-date period.