Underlying strength and earnings growth prospects make AllianceBernstein Holding L.P. (AB - Free Report) a solid bet now. The factors that might drive the stock higher include encouraging organic growth, strong fundamentals and efforts to enhance shareholders value.
Also, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 8.5%.
Further, it has been successful in gaining analysts’ confidence. Its current-year earnings estimates have been revised 5% upward, over the last 60 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Shares of AllianceBernstein have gained 19% over the past 12 months, underperforming the industry’s rally of 24.3%.
Why the Stock is Worth Buying?
Revenue Strength: AllianceBernstein’s revenues increased at a CAGR of 2.8% over the last five years (2013-2017). Further, the top line is expected to grow 7.5% in 2018, higher than the industry average of 4.7%.
Earnings Growth: AllianceBernstein witnessed earnings growth of 6.13% in the last three to five years compared with the industry’s average of 4.61%. This earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth rate (F1/F0) of 9.6%.
Moreover, the company’s long-term (three to five years) estimated EPS growth rate of 8.9% promises rewards for investors over the long run.
Impressive Capital Deployment Activities: The company remains committed to enhancing its shareholders’ value. In February 2018, it raised its quarterly dividend by 64.7% to 84 cents per share.
Superior Return on Equity (ROE): AllianceBernstein has an ROE of 14.72%, better than the industry average of 12.61%. This shows that the company reinvests its cash more efficiently.
Stock Seems Undervalued: AllianceBernstein has P/E and P/B ratios of 10.56 and 1.61 compared with the industry’s average of 11.46 and 1.78, respectively. Also, the stock has a Value Score of B. Based on these ratios, the stock seems undervalued.
Favorable VGM Score: AllianceBernstein has a VGM Score of A. Our research shows 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 to Consider
Waddell & Reed Financial (WDR - Free Report) has witnessed 18.5% upward estimate revisions for the last 60 days. In a year’s time, the company’s share price has gained more than 18%. It sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ameriprise Financial Services (AMP - Free Report) carries a Zacks Rank of 2. Its earnings estimates for 2018 have been revised nearly 1% upward over the last 60 days. Also, its shares have gained 20.4% in the past year.
Virtus Investment Partners (VRTS - Free Report) carries a Zacks Rank of 2. The Zacks Consensus Estimate for the company has jumped 4.1% for the current year, in the last 60 days. Its share price has gained 23.7% over the past year.
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