An improving operating backdrop, a rising-rate environment and easing of regulations, along with the strengthening of the domestic economy, should keep aiding banking stocks. So, we bring one such stock — Fidelity Southern Corporation (LION - Free Report) — which, based on its strong fundamentals and improving prospects, is a good investment option right now.
The company’s Zacks Consensus Estimate for 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, the company’s price performance seems impressive. Its shares have rallied 17.7% so far this year, outperforming 5.6% growth of the industry.
Fidelity Southern has other factors that make it an attractive pick right now.
Revenue Strength: Fidelity Southern’s revenues have witnessed a CAGR of 10.9% over the past five years (2013-2017). Also, its projected sales growth of 3.5% for 2018 and 4.3% for 2019 ensure the continuation of the uptrend in revenues.
Earnings per Share (EPS) Growth: Fidelity Southern witnessed earnings growth of 6% in the past three to five years. This earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth rate of 27.5% for 2018 and 9% for 2019.
Superior Return on Equity (ROE): Fidelity Southern has an ROE of 9.15%, higher than the industry average of 8.80%. This shows that the company reinvests its cash more efficiently.
Valuation Looks Reasonable: Fidelity Southern looks undervalued, with respect to its Price-to-Cash Flow (P/CF) and Price-to-Sales (P/S) ratios. The company has a P/CF ratio of 12.0 compared with the industry average of 16.7. Also, the bank’s P/S ratio of 2.4 is below the industry average of 3.9. In addition, Fidelity Southern has a Value Score of A. 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 Capstar Financial Holdings, Inc. (CSTR - Free Report) , Community Trust Bancorp, Inc. (CTBI - Free Report) and First BanCorp. (FBP - Free Report) .
Over the past 60 days, Capstar Financial has witnessed an upward earnings estimate revision of 2.7% for the current year. Over the past year, its share price has risen 2.1%. The stock currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, Community Trust Bancorp’s earnings estimates have been revised 2.7% upward for the current year. Additionally, its share price has increased 14.6% over the last 12 months. It currently carries a Zacks Rank of 2.
Over the past 60 days, First BanCorp also has a Zacks Rank #2. Its earnings estimates for 2018 have been revised 11.8% upward. Shares of the company have rallied 33% in a year’s time.
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