We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Reasons Why HSBC Holdings (HSBC) Stock is a Must-Buy Now
Read MoreHide Full Article
Strong capital position, high rates, an extensive network and business restructuring initiatives will aid HSBC Holdings’ (HSBC - Free Report) prospects. Several steps undertaken to focus more on Asia will strengthen its position in the region.
Analysts seem optimistic regarding the company’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for HSBC’s earnings has been revised 10.1% and 6% upward for 2023 and 2024, respectively. The stock presently sports a Zacks Rank #1 (Strong Buy).
Shares of the company have rallied 22% so far this year, outperforming the industry’s 9.9% growth by a wide margin.
Image Source: Zacks Investment Research
Some factors that make HSBC a solid pick right now.
Focus on Expanding in Asia: HSBC has been undertaking measures to bolster its performance with a special focus on building operations across Asia. In sync with this, the company re-launched its private banking business in India after eight years. Further, in 2022, it acquired 100% of the issued share capital of AXA Insurance in Singapore and L&T Investment Management Limited. Also, HSBC has been increasing its stakes in joint ventures based in China. These initiatives will likely help the company strengthen its position in the region, which constitutes more than half of its operations.
Business Streamlining: HSBC is streamlining its operations to further improve operating efficiency. In 2020, the company announced its transformation plan to reshape underperforming businesses, simplifying complex organizations and reducing costs. The company realized gross savings of $5.6 billion, with cost to achieve a spend of $6.5 billion by 2022-end. It expects to achieve an additional $1 billion of gross cost savings this year, driven by the actions undertaken in 2022.
Further, HSBC entered into an agreement to sell its Canada banking business in November 2022 (expected to close in the first quarter of 2024). The company has exited from the United States and Greece retail banking space. It is in the process of divesting retail banking operations in France and New Zealand as well as fully exiting Russia.
Revenue Strength: Though HSBC’s reported revenues improved in the first half of 2023, the metric declined at a CAGR of 2.7% over the last three years (ended 2022). Given the high-interest regime across the globe, the company’s top line is expected to witness decent growth. Also, its business streamlining initiatives and focus on the Asia region are expected to support the revenues going forward. The top line is expected to grow 24.8% in 2023 and 4.4% next year.
Steady Capital Deployments: Based on a solid capital position and lower debt-equity ratio compared with the industry, HSBC has been consistently rewarding shareholders. The company expects a dividend payout ratio of 50% (excluding the impacts of acquisitions and disposals) for both 2023 and 2024. Further, subject to the closure of the sale of its banking business in Canada, HSBC is considering paying a special dividend of 21 cents per share.
Also, HSBC repurchased shares worth up to $2 billion in May and June. In August, it announced plans to initiate a further share buyback of up to $2 billion, which is expected to be completed within three months.
Favorable Valuation: HSBC stock looks undervalued right now with respect to its price-to-earnings (P/E) (F1) and PEG ratios. It has a P/E (F1) ratio of 5.41, lower than the industry average of 6.88. Also, the company’s PEG ratio of 0.25 is below the industry average of 1.06.
HSBC has a Value Score of B. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Other Foreign Banks Worth a Look
A couple of other top-ranked foreign banks are ICICI Bank (IBN - Free Report) and Barclays (BCS - Free Report) .
ICICI Bank currently sports a Zacks Rank #1. Earnings estimates for fiscal 2024 have been revised 7.4% north over the past 60 days. In the past year, IBN’s shares have gained 6.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Barclays have remained unchanged for 2023 over the past 60 days. Shares of BCS have gained 1% in the past year. Currently, the company carries a Zacks Rank #2.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Reasons Why HSBC Holdings (HSBC) Stock is a Must-Buy Now
Strong capital position, high rates, an extensive network and business restructuring initiatives will aid HSBC Holdings’ (HSBC - Free Report) prospects. Several steps undertaken to focus more on Asia will strengthen its position in the region.
Analysts seem optimistic regarding the company’s earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for HSBC’s earnings has been revised 10.1% and 6% upward for 2023 and 2024, respectively. The stock presently sports a Zacks Rank #1 (Strong Buy).
Shares of the company have rallied 22% so far this year, outperforming the industry’s 9.9% growth by a wide margin.
Image Source: Zacks Investment Research
Some factors that make HSBC a solid pick right now.
Focus on Expanding in Asia: HSBC has been undertaking measures to bolster its performance with a special focus on building operations across Asia. In sync with this, the company re-launched its private banking business in India after eight years. Further, in 2022, it acquired 100% of the issued share capital of AXA Insurance in Singapore and L&T Investment Management Limited. Also, HSBC has been increasing its stakes in joint ventures based in China. These initiatives will likely help the company strengthen its position in the region, which constitutes more than half of its operations.
Business Streamlining: HSBC is streamlining its operations to further improve operating efficiency. In 2020, the company announced its transformation plan to reshape underperforming businesses, simplifying complex organizations and reducing costs. The company realized gross savings of $5.6 billion, with cost to achieve a spend of $6.5 billion by 2022-end. It expects to achieve an additional $1 billion of gross cost savings this year, driven by the actions undertaken in 2022.
Further, HSBC entered into an agreement to sell its Canada banking business in November 2022 (expected to close in the first quarter of 2024). The company has exited from the United States and Greece retail banking space. It is in the process of divesting retail banking operations in France and New Zealand as well as fully exiting Russia.
Revenue Strength: Though HSBC’s reported revenues improved in the first half of 2023, the metric declined at a CAGR of 2.7% over the last three years (ended 2022). Given the high-interest regime across the globe, the company’s top line is expected to witness decent growth. Also, its business streamlining initiatives and focus on the Asia region are expected to support the revenues going forward. The top line is expected to grow 24.8% in 2023 and 4.4% next year.
Steady Capital Deployments: Based on a solid capital position and lower debt-equity ratio compared with the industry, HSBC has been consistently rewarding shareholders. The company expects a dividend payout ratio of 50% (excluding the impacts of acquisitions and disposals) for both 2023 and 2024. Further, subject to the closure of the sale of its banking business in Canada, HSBC is considering paying a special dividend of 21 cents per share.
Also, HSBC repurchased shares worth up to $2 billion in May and June. In August, it announced plans to initiate a further share buyback of up to $2 billion, which is expected to be completed within three months.
Favorable Valuation: HSBC stock looks undervalued right now with respect to its price-to-earnings (P/E) (F1) and PEG ratios. It has a P/E (F1) ratio of 5.41, lower than the industry average of 6.88. Also, the company’s PEG ratio of 0.25 is below the industry average of 1.06.
HSBC has a Value Score of B. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Other Foreign Banks Worth a Look
A couple of other top-ranked foreign banks are ICICI Bank (IBN - Free Report) and Barclays (BCS - Free Report) .
ICICI Bank currently sports a Zacks Rank #1. Earnings estimates for fiscal 2024 have been revised 7.4% north over the past 60 days. In the past year, IBN’s shares have gained 6.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Barclays have remained unchanged for 2023 over the past 60 days. Shares of BCS have gained 1% in the past year. Currently, the company carries a Zacks Rank #2.