On Nov 18, 2016, we issued an updated research report on Zions Bancorporation (ZION - Free Report) . Shares of this Utah-based banking and related services provider have surged nearly 40% year to date. The rise reflects the success of its restructuring efforts and subsequent approval of its capital plan by the Fed in June.
Zions has been successful in lowering costs through several initiatives, evident from continued decline in operating expenses. Also, management remains on track to exceed its cost savings target of $120 million in 2017.
Additionally, Zions is undertaking efforts to improve its balance sheet position. This led to the approval of its 2016 capital plan, which included a dividend hike and a resumption of share repurchase program (up to $180 million). Given the company’s robust capital position, it will continue to return capital and boost investors’ confidence.
Further, analysts remain optimistic about Zions prospects. Over the last 30 days, the Zacks Consensus Estimate has increased 3.8% and 2.2% for 2016 and 2017, respectively.
However, a low-rate environment continues to exert pressure on Zions’ net interest margin. We believe the margin pressure will continue unless there is significant improvement in rate environment.
Also, concentration risk and regulatory restrictions make us apprehensive. High level of risky commercial real estate assets are likely put the bank in a tight spot. Further, Zions’ oil and gas-related exposure remains a matter of concern in the near term.
Zions currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better-ranked stocks in the finance space include Carolina Financial Corporation (CARO - Free Report) , Farmers Capital Bank Corporation (FFKT - Free Report) and Hancock Holding Company (HBHC - Free Report) .
Carolina Financial has witnessed an upward earnings estimate revision of 12.9% for the current year, over the past 30 days. Also, its share price is up 41.5% 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.
Farmers Capital Bank also flaunts a Zacks Rank #1 and has witnessed an upward earnings estimate revision of 8.3% for the current year, in the past 30 days. Moreover, its share price is up 22.3% year to date.
Hancock Holding witnessed an upward earnings estimate revision of 2.2% for the current year over the past 30 days. Also, its share price is up 62.7% year to date. It currently carries a Zacks Rank #2 (Buy).
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