Over the past few weeks, banking stocks have been witnessing a bullish trend reflecting improved earnings. Further, with Donald Trump elected President, the banks expect fewer regulations. Also, chances of a rate hike in December are quite high.
Hence, it’s the right time to add a few banking stocks to your portfolio. Today, we bring one such stock – South State Corporation (SSB - Free Report) – that continues to depict strong fundamentals and improving prospects.
In third-quarter 2016, South State’s earnings surpassed the Zacks Consensus Estimate. Moreover, it has witnessed an upward earnings estimate revision of nearly 1% for 2016 over the past 30 days, indicating analysts’ optimism about its growth prospects.
Further, this Zacks Rank #2 (Buy) stock has risen over 18% year to date and has an impressive earnings surprise history. You can see that in the chart below:
Why a Solid Pick?
Revenue Strength: South State Corporation’s net revenue has risen at a compounded annual growth rate (“CAGR”) of 21% over the last five years (2011–2015). The sturdy top-line increase was backed by strong loan and deposit growth. Moreover, the company’s projected sales growth (F1/F0) of 3.6% ensures continuation of the upward revenue trend.
Earnings per Share Growth: South State has witnessed approximately 7.8% rise in earnings per share over the last three–five years. Further, this earnings momentum will likely continue in the near term, as reflected by the company’s projected EPS growth (F1/F0) of 5.6%.
Superior ROE: South State’s Return on Equity (ROE) ratio is 9.83% compared with industry average of 7.88%. This indicates that the company reinvests more efficiently as compared with the industry.
Strong Leverage: The debt-to-equity ratio for South State Corporation is 0.05 compared with the industry average of 0.33. This indicates greater financial stability for the company and lesser risk for shareholders.
Valuation Looks Reasonable: South State has a Value Style Score of ‘B.’ The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with Zacks Rank #1 (Strong Buy) or #2, offer the best upside potential.
Other Stocks Worth a Look
Other stocks worth considering in the financial sector include Farmers Capital Bank Corp. (FFKT - Free Report) , Carolina Financial Corp. (CARO - Free Report) and Ameris Bancorp (ABCB - Free Report) .
Farmers Capital has witnessed an upward earnings estimate revision of 8.3% over the past 30 days. Also, its share price is up over 22% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carolina Financial also sports a Zacks Rank #1 and has witnessed an upward earnings estimate revision of 12.9% over the past 30 days. Moreover, its share price is up nearly 41% year to date.
Ameris Bancorp currently carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 1.3% over the past 30 days and its share price has risen over 25% year to date.
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