Given that the banking industry remains well positioned for growth, driven by the Fed rate hikes and the benefits from the gradually stabilizing operating environment, we think that it is a wise idea to add a few stocks from that industry to your portfolio now. Based on its underlying strength and good growth prospects, First BanCorp. (FBP - Free Report) stock seems to be a solid bet now.
The company’s Zacks Consensus Estimate for current-year earnings has been revised 32.6% upward over the past 60 days, indicating analysts’ optimism about its earnings growth potential. As a result, the stock currently carries a Zacks Rank #2 (Buy).
The stock’s price performance also looks impressive. Shares of the company have surged 37.8% in the past year, outperforming the 13.3% growth of the industry it belongs to.
Following are a few other factors that make the stock a viable investment option:
Earnings per Share (EPS) Growth: In the last three-five years, First BanCorp witnessed 13.5% EPS growth, higher than the industry average of 8.6%. This earnings momentum is likely to continue in the near term, reflected by the company’s projected EPS growth of nearly 14% and 7.9% for 2018 and 2019, respectively.
Also, the company boasts an impressive earnings surprise history. Its bottom line surpassed the Zacks Consensus Estimate in all the trailing four quarters with an average beat of 52.2%.
Revenue Strength: First BanCorp’s revenues witnessed a CAGR of nearly 1% over the last five years (2013-2017). Moreover, the company’s projected sales growth of 9.6% for 2018 (higher than the industry average of 3.5%) ensures the continuation of the uptrend in revenues.
Stock Looks Undervalued: First BanCorp stock looks undervalued with respect to its price-to-earnings (P/E) and price-to-book (P/B) ratios. It has a P/E (F1) ratio of nearly 14.0 compared with the industry’s average of 15.6. Moreover, the company’s P/B ratio of 0.9 is below the industry average of 1.5. Also, First BanCorp has a Value Score of B. Our research shows that stocks with a Value 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
A few other top-ranked stocks in the same space are Capstar Financial Holdings, Inc. (CSTR - Free Report) , Farmers Capital Bank Corporation and Popular, Inc. (BPOP - Free Report) , each sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Capstar Financial has witnessed an upward earnings estimate revision of 4.5% for the current year over the past 60 days. Its share price has increased 5.8% in a year’s time.
Farmers Capital has witnessed an upward earnings estimate revision of 5.8% for the current year over the past 60 days. Its share price has surged 34.1% in the past year.
Popular stock has seen the Zacks Consensus Estimate for current-year earnings being revised 7.2% upward in the past 60 days. Its shares have rallied nearly 20% in the past 12 months.
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