The third-quarter 2016 earnings cycle for the Finance sector is almost over. Results of the industry participants depict a significant improvement in the sector’s fundamentals.
Huntington Bancshares Inc. (HBAN - Free Report) is one such company that came out with better-than-expected results. This Ohio-based multi-state bank holding company experienced growth in revenues, and loan and deposit balances during the reported quarter.
Notably, shares of Huntington have gained more than 22% on the NasdaqGS in the last six months. The company continues to reflect strength in several areas despite the challenging operating environment.
Why the Surge May Continue
Inorganic Growth Prospects: Backed by robust liquidity position, Huntington is poised to grow via acquisitions. In Aug 2016, Huntington completed the acquisition of FirstMerit Corporation to fortify its Midwest footprint. Further, in Apr 2015, the company closed the acquisition of Australia-based Macquarie Equipment Finance, Inc. Huntington also announced the opening of additional 43 in-store Meijer branches in Michigan. The company continues to move forward by positioning itself for growth and implementing strategic initiatives designed to drive revenue growth.
Revenue Growth: Top-line growth remains a key strength at Huntington, with estimated growth rate of 17.04% for 2016 versus 3.92% for the industry. Moreover, during the reported quarter, revenue displayed an improvement of 24% on a year-over-year basis. Also, management projects total revenue for full-year 2016 to increase by 16%–18%, excluding significant items.
Committed to Shareholders: The company remains focused on managing capital levels efficiently by deploying steady capital activities directed toward enhancing shareholders’ wealth. The company’s board of directors hiked the quarterly common stock dividend by 14% in Oct 2016, bringing the dividend amount to 8 cents per share. Moreover, the 2016 capital plan, which got Fed's approval in Jun 2016, also includes the issuance of capital related to the FirstMerit Corporation acquisition.
Stock is Undervalued: The stock is currently trading at a P/E ratio of 14.11, compared to the industry average of 17.21.
Superior Return on Equity: Huntington has an impressive ROE of 9.90%, compared with the industry average of 8.29%. This indicates that the company reinvests more efficiently than its peers.
Upward Estimate Revisions: Over the last 30 days, the Zacks Consensus Estimate for the stock moved upward by 4.7% to 22 cents per share for the current quarter and by 2.4% to 85 cents per share for the current year. This indicates analysts’ optimism about the company’s earnings performance.
Huntington currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks that Warrant a Look
Virtus Investment Partners, Inc. (VRTS - Free Report) also sports a Zacks Rank #1. The Zacks Consensus Estimate for the stock for the current quarter jumped 20.9% to $1.85 per share over the last 30 days.
Lazard Ltd. (LAZ - Free Report) holds a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the current quarter moved upward by 9.7% to $1.02 per share over the last 30 days.
Citizens Financial Group, Inc. (CFG - Free Report) also carries Zacks Rank #2. The Zacks Consensus Estimate for the current quarter increased 4% to 52 cents per share over the last 30 days.
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