East West Bancorp, Inc. (EWBC - Free Report) is well positioned for growth, supported by continued rise in loans and deposit balances, as well as increasing interest rates. Also, the company’s dividend payout policy seems impressive. Thus, it seems to be a wise idea to add the stock to your portfolio now.
The company’s Zacks Consensus Estimate for the current-year earnings has been revised 3.1% upward over the last 60 days, reflecting analysts’ optimism regarding its earnings growth potential. As a result, the stock currently carries a Zacks Rank #2 (Buy).
Further, its price performance seems impressive. The company’s shares have rallied 15.1% so far this year, outperforming 13.3% growth of the industry.
East West Bancorp has a number of other factors that make it a solid investment option.
Revenue Strength: Driven by improving rate environment and rising loan demand, East West Bancorp’s organic growth story looks impressive. Its revenues have witnessed a CAGR of 12.9% over the last five years (2013-2017). Also, its projected sales growth of 9.2% for 2018 and 9.8% for 2019 ensure continuation of the uptrend in revenues.
Earnings Per Share (EPS) Growth: East West Bancorp witnessed earnings growth of 12.8% in the last three to five years, higher than the industry average of 11.4%. This earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth rate of 35.3% for 2018 compared with industry average of 23.5%.
Further, the company’s long-term (three to five years) estimated EPS growth rate of 10.5% promises rewards for investors.
Strong Leverage: East West Bancorp’s debt/equity ratio is 0.12 compared with the industry average of 0.20. The relatively strong financial health of the company will help it perform better than its peers in a dynamic business environment.
Superior Return on Equity (ROE): East West Bancorp has an ROE of 14.15%, higher than the industry average of 10.73%. 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 (F1) ratio of 15.0 compared with the industry average of 15.4. Also, the bank’s PEG ratio of 1.4 is below the industry average of 1.7. In addition, East West 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
Some other top-ranked stocks in the same industry include Bank of Commerce Holdings (BOCH - Free Report) , People's Utah Bancorp (PUB - Free Report) and Guaranty Bancorp (GBNK - Free Report) . All three stocks carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank of Commerce has witnessed an upward earnings estimate revision of 2.6% for the current year, over the past 60 days. Also, over the past year, its share price has risen 4.8%.
People's Utah Bancorp’s 2018 earnings estimates have been revised 1.5% upward, in the past 60 days. Additionally, its share price has surged 38.7% over the last 12 months.
Guaranty Bancorp’s earnings estimates for 2018 have remained unchanged over the past 60 days. Moreover, shares of the company have rallied 23.4% in a year’s time.
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