With the Finance sector turning out to be one of the best performers last earnings season, we thought of bringing up one stock that has plenty of upside potential. Today we have chosen – East West Bancorp, Inc. (EWBC Quick QuoteEWBC - Free Report) – for you to consider.

Headquartered in Pasadena, CA, East West Bancorp offers a profitable investment opportunity, driven by steady earnings growth. The company not only beat estimates in the first quarter, but also has been witnessing upward estimate revisions, reflecting analysts’ optimism about its growth prospects.

Over the last 60 days, the Zacks Consensus Estimate for 2017 and 2018 increased 5.2% and 2.7%, respectively. Further, shares of this Zacks Rank #2 (Buy) stock have rallied 5.9%, so far this year as against 5.5% decline for the Zacks categorized West Banks industry.



East West Bancorp has a number of other factors that make it a solid investment option.

Revenue Strength: East West Bancorp’s revenues witnessed a CAGR of 6% over the last five years (2012–2016). Driven by improving rate environment and rising loan demand, the company’s top line is expected to grow 12.8% in 2017 and 8.6% for 2018.

Earnings Growth: East West Bancorp witnessed earnings growth of 18% in the last three to five years. This earnings momentum is likely to continue in the near term as reflected by the company’s projected earnings per share (EPS) growth rate (F1/F0) of 15.9%, compared with industry average of 11.1%.

Further, the company’s long-term (three to five years) estimated EPS growth rate of 10.5% promises rewards for investors in the long run.

Strong Leverage: East West Bancorp’s debt/equity ratio is 0.14 compared with the industry average of 0.18. The relatively strong financial health of the company will help it perform better than its peers under a dynamic business environment.

Superior Return on Equity (ROE): East West Bancorp has an ROE of 12.49%, better than the industry average of 9.85%. This shows that the company reinvests its cash more efficiently.

Valuation Looks Reasonable: East West Bancorp looks undervalued with respect to its Price-to-Earnings (P/E) and PEG ratios. The company has a P/E ratio of 15.75 compared with the industry average of 17.16. Also, the bank’s PEG ratio of 1.50 is below the industry average of 1.81.

Favorable VGM Score: Currently, East West Bancorp has a VGM Score of ‘B’. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.

Other Stocks Worth a Look

Some other stocks worth considering in the same industry include Bank of Hawaii Corporation (BOH Quick QuoteBOH - Free Report) , Central Pacific Financial Corp. (CPF Quick QuoteCPF - Free Report) and Preferred Bank (PFBC Quick QuotePFBC - Free Report) . All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bank of Hawaii has witnessed an upward earnings estimate revision of nearly 1% for the current year, over the past 60 days. Also, over the last one year, its share price rose 8.8%.

Central Pacific Financial earnings estimates were revised 1.9% upward for the current year, in the past 60 days. Also, its share price increased 23.2% over the last one year.

Preferred Bank recorded an upward earnings estimate revision of around 1% for the current year, in the past 60 days. Also, its share price has seen a surge of 52.7% over the last one year.

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