A favorable operating backdrop with the anticipation of another interest rate hike by the Fed has driven investors’ optimism on banking stocks. Therefore, some of these stocks are profitable picks, courtesy of their strong fundamentals and solid long-term prospects.
One such promising stock is Washington Federal, Inc. (WAFD - Free Report) , which has plenty of upside potential. Also, the company is diligently involved in capital deployment activities.
Further, the company not only beat estimates in the third quarter but has also been witnessing upward estimate revisions. This reflects analysts’ optimism on the company’s prospects. Over the last 60 days, the Zacks Consensus Estimate for earnings has moved up around 1% for 2017.
Additionally, shares of this Zacks Rank #2 (Buy) stock have gained 2.9% over a year compared with the industry’s rally of 4.3%.
Notably, Washington Federal has a number of other aspects that make it an attractive investment option.
What Makes Washington Federal an Attractive Pick?
Revenue Growth: Organic growth is a key driver for Washington Federal, with sales recording a compound annual growth rate (CAGR) of 3.5% over the four-year period (2014-2017). Moreover, growth in loans indicates a strong business trend for the bank.
The company’s projected sales growth (F1/F0) of 5.95% (as against the nil industry average) indicates consistent improvement in revenues.
Earnings Strength: Washington Federal witnessed earnings growth of 8.5% over the last three-five years. In addition, the company’s long-term estimated earnings per share (EPS) growth rate of 6.5% promises rewards for investors. Also, it recorded an average positive earnings surprise of 4.3% in the trailing four quarters.
Steady Capital Deployment: Washington Federal’s trend of returning capital to shareholders is likely to boost investors’ confidence in the stock. Since fiscal 2011, the company has been annually raising its dividend. The last hike was announced in January 2017. Further, the company has its share repurchase program in place.
Stock is Undervalued:Washington Federal has a P/E and P/B ratios of 16.5 and 1.48 compared with the S&P 500 average of 19.52 and 3.18, respectively. Based on these ratios, the stock seems undervalued.
Stocks to Consider
Enterprise Financial Services Corporation (EFSC - Free Report) has been witnessing upward estimate revision in the last 30 days. Additionally, the stock has rallied more than 6% in the past six months. It currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
First Financial Bancorp (FFBC - Free Report) has been witnessing upward estimate revision in the past month. Also, the company’s shares have risen nearly 6.4% in the past six months. It holds a Zacks Rank of 2.
JMP Group LLC (JMP - Free Report) has been witnessing upward estimate revision for the last 30 days. The company’s shares have gained around 1.7% in six months’ time. It also carries a Zacks Rank of 2.
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