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.
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