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HSBC Well Poised on Restructuring Efforts: Time to Buy?

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On May 31, we issued an updated research report on HSBC Holdings plc (HSBC - Free Report) . Given the success of its cost-saving initiatives, extensive global network and strong capital position, the company’s profitability should continue to improve, going forward.

Shares of HSBC have gained 8.3% so far this year outperforming the 7.6% rally for the Zacks categorized Foreign Banks industry.

Notably, this Zacks Rank #2 (Buy) stock’s current-year earnings estimates increased nearly 1% over the last 30 days.



HSBC remains on track to achieve its cost saving targets through its streamlining actions.  Almost two years back, the company initiated its cost-cutting program with a target to lower expenses by $6 billion by the end of 2017.

HSBC remains strong with respect to its balance sheet and liquidity position. The company has been striving hard to lower its risk-weighted assets (RWAs). At the end of first quarter, the bank exceeded its $290 billion RWA reduction aim.

Given its stable capital position, HSBC has been consistently rewarding shareholders. The company repurchased shares worth $3.5 billion since Aug 2016. Also, its plan to keep dividend payout ratio of 40–60% intact will surely boost investors’ confidence in the stock.

On the flip side, weak European economy, higher litigation costs and stringent regulations will likely keep HSBC’s financials under stress.

Other Stocks Worth a Look

Other stocks in Foreign Banks category worth considering include ICICI Bank Limited (IBN - Free Report) , HDFC Bank Limited (HDB - Free Report) and Bancolombia S.A. (CIB - Free Report) .  All these carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ICICI Bank witnessed an upward earnings estimate revision of 1.8% for the current fiscal year, in the last 60 days. Its share price increased 32.4%, year to date.

HDFC Bank witnessed an upward earnings estimate revision of 1.9% for the current fiscal year, in the last 60 days. In the last five months, its share price rallied 44.7%.

For the current year, Bancolombia S.A.’s Zacks Consensus Estimate has been revised 2.9% upward, in the last 60 days. Its share price increased 20% so far this year.

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