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Analyst Blog

On Nov 8, 2016, the stock of Hilltop Holdings Inc. (HTH - Free Report) climbed to a 52-week high of $25.18. The upside in the stock is believed to have been driven by a profitable third quarter reported last month as well as some of the recent announcements made by the company.

Investors favorably viewed the company’s third-quarter results, which included operating earnings per share of 53 cents that came in line with the Zacks Consensus Estimate and increased 12.8% year over year. This upside came on the back of solid performance by the company’s units – PlainsCapital Bank, PrimeLending and HilltopSecurities.

HILLTOP HLDGS Price and Consensus

HILLTOP HLDGS Price and Consensus | HILLTOP HLDGS Quote

The quality of earnings was strong as evident by an 85% year-over-year decline in provision for loan losses to $4 million. Also, top line of $454 million beat the Zacks Consensus Estimate of $425 million and increased 10.2% year over year owing to growth in non-interest income. Return on average assets was 1.69% in the quarter relative to 1.49% in the prior year. Return on average equity was 11.4% relative to 10.97% in the prior year.

The stock must also have received a boost from the recent announcement that the company will start paying quarterly dividend, for the first time in its history. Its board has authorized a dividend program and declared a quarterly cash dividend of 6 cents per share. The initiation of dividend reflects the company’s strong capital position and consistent earnings generation, which cements investors’ confidence in its stock.

Investors also favorably view the recently announced key leadership and organizational changes, which will steer the company toward future growth as well as mergers and acquisitions.

Hilltop Holdings carries a Zacks Rank #2 (Buy).

Some other players that excelled in the third quarter include Access National Corporation (ANCX - Free Report) , Carolina Financial Corporation (CARO - Free Report) and CenterState Banks, Inc. (CSFL - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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