Amid global headwinds, investors have been shying away from investing in the banking sector. However, totally ignoring the sector is not wise as there are several companies with a decent performance history and strong fundamentals, signaling a profitable investment opportunity.
Flagstar Bancorp Inc. (FBC - Snapshot Report) is one such company that continues to reflect strength in several areas and adding the stock to your investment portfolio should not disappoint. With a market capitalization of more than $1.5 billion, the company provides financial products and services to individuals and businesses in the U.S.
Notably, the stock of this Troy, MI-based company has gained more than 21% year-to-date.
Why is the Stock an Attractive Pick?
Earnings Strength: Flagstar Bancorp has recorded earnings per share (EPS) growth rate of 5.5% over a period of three to five years. Moreover, the earnings growth rate for the current year is expected to be 4.8%.
Also, the company boasts an average earnings surprise of approximately 35% over the trailing four quarters.
Revenue Growth: Organic growth remains solid at Flagstar Bancorp. Revenues grew at a CAGR of 4.7% over the last five years (2011–2015). Further, the top line is expected to grow 3.2% in 2016.
Return on Equity: Flagstar Bancorp has a return on equity of 10.0% compared with the industry average of 7.1%.
Price-to-Earnings (P/E) Ratio: Flagstar Bancorp’s P/E ratio stands at 11.71 compared with the industry average of 15.76, indicating that the stock is undervalued.
Upward Estimate Revisions: Over the past 60 days, the Zacks Consensus Estimate has increased 11.9% and 0.8% to $2.35 and $2.40 for 2016 and 2017, respectively. Backed by these upward estimate revisions, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
If you are interested in stocks in the savings and loan space, you may consider Meta Financial Group, Inc. (CASH - Snapshot Report) , HomeStreet, Inc. (HMST - Snapshot Report) and Flushing Financial Corp. (FFIC - Snapshot Report) as well.
Meta Financial currently sports a Zacks Rank #1. Notably, the company’s earnings for the current year are expected to grow at an impressive 34% rate. Also, the stock has gained around 38% in the past six months.
HomeStreet’s earnings for 2016 are expected to grow at the rate of 17.9% and the stock currently sports a Zacks Rank #1. Further, over the last six months, shares of the company have gained more than 27%.
Flushing Financial’s shares have gained 10.8% in the trailing six months. In addition, the company’s earnings for the current year are expected to grow at the rate of 19.8%. The stock carries a Zacks Rank #2 (Buy).
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