Back to top

KeyCorp Hikes Dividend by 11.8%: Time to Own the Stock?

Read MoreHide Full Article

As expected by the markets, KeyCorp (KEY - Free Report) announced a rise in its quarterly cash dividend. This was part of its capital plan approved by the Federal Reserve in Jun 2016.

KeyCorp declared a quarterly cash dividend of 9.5 cents per share, up 11.8% from the prior payout. The dividend will be paid on Jun 15 to shareholders on record as of May 30. Based on the last day’s closing price of $17.65 per share, the dividend yield stands at 2.15%. Additionally, KeyCorp has a share repurchase program in place of up to $350 million.  

Further, KeyCorp’s shares have rallied 42.6% in the last one year compared with a 32.6% gain for the Zacks categorized Major Regional Banks industry. Further, the company has a Momentum Style Score of ‘B’.

Are you contemplating investment in this value enhancing Zacks Rank #3 (Hold) stock? Before taking any decision, let’s have a look at KeyCorp’s fundamentals and growth prospects.

Earnings Strength: KeyCorp depicts stable earnings. In the past three to five years, the bank witnessed earnings per share (EPS) growth of 26.1%. Also, the company’s earnings are projected to grow at the rate of 25.6% for 2017 compared with 25.6% expected for the industry.

Further, the company’s earnings are projected to grow at a rate of 7.8% over the long term.

Revenue Growth: Organic growth remains solid at KeyCorp. The company witnessed an increase in top line at a CAGR of 5.1% over the last five years (2012–2016). Further, revenues are expected to grow at the rate of 23.48% in 2017.

Expense Management: KeyCorp’s cost-saving measures have produced results as it continues to witness a downtrend in expenses. While operating expenses increased in 2016 mainly owing to the First Niagara deal, KeyCorp expects operating expenses to be in the range of $3.65–$3.75 billion in 2017.

Leverage: KeyCorp’s debt/equity ratio stands at 0.88 compared with the industry average of 0.86, indicating higher debt level relative to the industry.

Valuation Looks Stretched: Looking at KeyCorp’s price-to-book (P/B) ratio, investors might not want to pay any further premium. The company currently has a trailing 12-month P/B ratio of 1.45, which is above the industry average of 1.41.

Stocks Worth a Look

Some better-ranked stocks in the same industry include Comerica Incorporated (CMA - Free Report) , M&T Bank Corporation (MTB - Free Report) and Northern Trust Corporation (NTRS - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comerica witnessed an upward earnings estimate revision of 9.9% for the current year, in the last 60 days. Its share price increased 51.6% in the last one year.

M&T Bank witnessed an upward earnings estimate revision of 5.3% for the current year, in the last 60 days. Its share price surged 35.2% in the last one year.

Northern Trust’s share price jumped 20.8% in the last one year. For the current year, in the last 60 days, its Zacks Consensus Estimate was revised 1.1% upward.

Will You Make a Fortune on the Shift to Electric Cars?  

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

More from Zacks Analyst Blog

You May Like