East West Bancorp, Inc.’s (EWBC - Free Report) board of directors have planned a 15% hike in the company’s quarterly common stock dividend, starting from the third quarter of 2018. The revised quarterly dividend will be 23 cents per share versus the previous figure of 20 cents. As per past practices, the timing of the dividend will be announced in July.
Given the company’s strong cash-generation capabilities as well as a solid balance sheet, it is expected to keep enhancing shareholder value through efficient capital deployment activities.
Investors, who are willing to avail this dividend, can have a look at the fundamentals and growth prospects of this Zacks Rank #3 (Hold) stock.
Earnings Strength: East West Bancorp depicts a solid earnings picture. In the past three to five years, it witnessed earnings per share (EPS) growth of 12.8%, higher than the industry average of 11.4%. Also, the company’s earnings are anticipated to grow more than 30% in 2018 compared with 24.9% projection for the industry.
Further, the company’s long-term (three-five years) EPS growth rate of 10.5% promises reward for shareholders.
Revenue Growth: East West Bancorp’s revenues have witnessed a CAGR of 12.9% over the last five years (2013-2017). Moreover, the company’s projected sales growth of 9.2% for 2018 (higher than the industry average of 5.8%) and 9.7% for 2019 indicate a continuation of the upward momentum in revenues.
Strong Leverage: East West Bancorp’s debt/equity ratio currently stands at 0.12, lower than the industry average of 0.19. This indicates that the company has a lower debt burden relative to the industry and that it will be financially viable, even in adverse economic conditions.
Stock Looks Undervalued: East West Bancorp has a PEG ratio and P/CF ratio of 1.5 and 15.7 compared with the industry’s average of 1.7 and 15.9, respectively. Based on these ratios, the stock seems undervalued. Also, it has a Value Score of B.
Also, the company’s price performance seems impressive. Its shares have gained 13.7% so far this year, outperforming 9.9% growth recorded by the industry it belongs to.
Stocks to Consider
A few better-ranked stocks in the same space are SVB Financial Group (SIVB - Free Report) , First Hawaiian, Inc. (FHB - Free Report) and People's Utah Bancorp (PUB - Free Report) .
Shares of SVB Financial have gained 80.1% over the past 12 months. Its Zacks Consensus Estimate for the current-year earnings has moved up 13.8% over the last 60 days. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
First Hawaiian currently has a Zacks Rank #2 (Buy). Its shares have gained 3.1% in the past year. Its Zacks Consensus Estimate for the current year has been revised 1.5% upward over the last 60 days.
People's Utah Bancorp’s shares have gained 40.4% over the past 12 months. Its Zacks Consensus Estimate for the current-year earnings has climbed 1.5% upward over the last 60 days. It also has a Zacks Rank of 2.
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