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The Zacks Analyst Blog Highlights: M&T Bank, Customers Bancorp, Metropolitan Bank Holding and Triumph Bancorp
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For Immediate Release
Chicago, IL – July 11, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include M&T Bank Corp. (MTB - Free Report) , Customers Bancorp, Inc. (CUBI - Free Report) , Metropolitan Bank Holding Corp. (MCB - Free Report) and Triumph Bancorp, Inc. .
While banks are gearing up for the Q2 earnings season, the Federal Reserve has given clean bills of health to majority of the large American banks. Strong jobs numbers, in fact, raised the possibility of further rate hikes which bodes well for banks.
The financial sector at large posted its biggest one-day advance in over three months, with banks leading the way. Let us, thus, focus on banks that are likely to make the most of the Q2 earnings season. Such banks are positioned to report upbeat earnings results, which will eventually lead to an uptick in share price.
Dividend Boost
So far this year, bank stocks have been underperforming the broader S&P 500. But bullish investors are optimistic that banks’ discouraging performance will soon come to an end. Banks are planning to bump up dividends after passing the Fed’s latest round of stress tests with flying colors. This, invariably, will provide a boost to share prices of a select number of U.S. banks. The increasing number of dividends is a reflection of tax cut benefits and stronger capital ratios. In fact, greater capital ratios give banks more room to boost shareholder returns.
Nine banks, namely Huntington Bancshares, KeyCorp, Wells Fargo, BB&T, Regions Financial, Fifth Third Bancorp, JPMorgan Chase, SunTrust Banks and US Bancorp, have already planned to increase dividends.
Banks’ poor show this year, by the way, may indicate that they are comparatively undervalued compared to the broader equity market. While the KBW Nasdaq Bank Index has shed 0.1% on a year-to-date basis, the S&P is up 4%.
Bespoke Investment Group macro strategist George Pearkes has in fact found out by using a mathematical model that bank stock prices by utilizing two-year Treasury yields and investment-grade bond spreads as model inputs, are recently priced at 9% below their fair values. Thus, banks have the potential to climb higher.
And why not? Solid June employment data has given the Fed a green signal to continue hiking rates. The United States has been able to create 213,000 jobs in June; a healthy sign showing that corporates are finding ways to fill positions despite the lack of skilled workers. Such hiring figures easily topped analysts’ estimates of 200,000 job additions (read more: Profit From Strong Job Additions With These 5 Top-Ranked Picks).
A move toward higher rates is always favorable for banks. Higher interest rates can boost bank profits as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities.
Fed Gets Slightly More Hawkish
Fed, in the meantime, has raised its benchmark federal funds rate by a quarter percentage point to a range of 1.75% to 2% last month. The Fed’s dot plot, in fact, indicated that policy makers predict two additional rate hikes this year for a total of four increases instead of three as planned earlier.
By the end of this year, the median forecast for the federal funds rate stands at 2.4%, compared with the March forecast of 2.1%. Beyond this year, the policy-setting Federal Open Market Committee predicts that it will hike rates three times next year and one more time the following year to propel its benchmark rate up to 3.4% (read more: Fed Lifts Rates for the Second Time in 2018: Winners & Losers).
4 Bank Stocks to Buy Heading Into Q2 Earnings
The aforesaid factors will surely help banks stay afloat this Q2. For the Finance sector, of which the Major Banks industry is the biggest earnings contributor, total Q2 earnings are expected to grow 18.4% from the same period last year on 3.8% higher revenues. This would follow 25.1% earnings growth in the preceding quarter on 4.8% higher revenues (read more: What's Keeping Bank Stocks Down?).
This calls for investing in four banks, which are expected to report a significant uptick in Q2 earnings. These stocks have a positive Earnings ESP — our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. These stocks also flaunt a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
M&T Bank Corp. operates as the holding company for Manufacturers and Traders Trust Company; and Wilmington Trust, National Association that provide retail and commercial banking services. The stock, which part of the Banks - Major Regional industry, is expected to return 34.1% this year.
The company is expected to report earnings results for the quarter ending June 2018 on Jul 18. M&T Bank has an Earnings ESP of +0.58%.
Customers Bancorp, Inc. operates as the bank holding company for Customers Bank that provides financial products and services to small and middle market businesses, not-for-profits, and consumers. The stock, which part of the Banks - Southeast industry, is expected to return 26.4% in 2018.
The company is likely to report earnings results for the quarter ending June 2018 on Jul 25. Customers Bancorp has an Earnings ESP of +3.50%.
Metropolitan Bank Holding Corp. operates as the bank holding company for Metropolitan Commercial Bank that provides a range of business, commercial, and retail banking products and services. The stock, which part of the Banks - Northeast industry, is expected to return 9.2% this year.
The company is expected to report earnings results for the quarter ending June 2018 on Jul 25. Metropolitan Bank has an Earnings ESP of +5.88%.
Triumph Bancorp, Inc. operates as a financial holding company for TBK Bank, SSB that provides banking and commercial finance products and services to retail customers and small-to-mid-sized businesses in the United States. The stock, which part of the Banks - Southeast industry, is expected to return 22.3% in 2018.
The company is expected to report earnings results for the quarter ending June 2018 on Jul 18. Triumph Bancorp has an Earnings ESP of +0.32%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: M&T Bank, Customers Bancorp, Metropolitan Bank Holding and Triumph Bancorp
For Immediate Release
Chicago, IL – July 11, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include M&T Bank Corp. (MTB - Free Report) , Customers Bancorp, Inc. (CUBI - Free Report) , Metropolitan Bank Holding Corp. (MCB - Free Report) and Triumph Bancorp, Inc. .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Tuesday’s Analyst Blog:
4 Top Bank Stocks to Buy Ahead of Q2 Earnings
While banks are gearing up for the Q2 earnings season, the Federal Reserve has given clean bills of health to majority of the large American banks. Strong jobs numbers, in fact, raised the possibility of further rate hikes which bodes well for banks.
The financial sector at large posted its biggest one-day advance in over three months, with banks leading the way. Let us, thus, focus on banks that are likely to make the most of the Q2 earnings season. Such banks are positioned to report upbeat earnings results, which will eventually lead to an uptick in share price.
Dividend Boost
So far this year, bank stocks have been underperforming the broader S&P 500. But bullish investors are optimistic that banks’ discouraging performance will soon come to an end. Banks are planning to bump up dividends after passing the Fed’s latest round of stress tests with flying colors. This, invariably, will provide a boost to share prices of a select number of U.S. banks. The increasing number of dividends is a reflection of tax cut benefits and stronger capital ratios. In fact, greater capital ratios give banks more room to boost shareholder returns.
Nine banks, namely Huntington Bancshares, KeyCorp, Wells Fargo, BB&T, Regions Financial, Fifth Third Bancorp, JPMorgan Chase, SunTrust Banks and US Bancorp, have already planned to increase dividends.
(Source: MarketWatch, Data as of July 2)
Banks Are Undervalued
Banks’ poor show this year, by the way, may indicate that they are comparatively undervalued compared to the broader equity market. While the KBW Nasdaq Bank Index has shed 0.1% on a year-to-date basis, the S&P is up 4%.
Bespoke Investment Group macro strategist George Pearkes has in fact found out by using a mathematical model that bank stock prices by utilizing two-year Treasury yields and investment-grade bond spreads as model inputs, are recently priced at 9% below their fair values. Thus, banks have the potential to climb higher.
And why not? Solid June employment data has given the Fed a green signal to continue hiking rates. The United States has been able to create 213,000 jobs in June; a healthy sign showing that corporates are finding ways to fill positions despite the lack of skilled workers. Such hiring figures easily topped analysts’ estimates of 200,000 job additions (read more: Profit From Strong Job Additions With These 5 Top-Ranked Picks).
A move toward higher rates is always favorable for banks. Higher interest rates can boost bank profits as they increase the spread between what banks earn by funding longer-term assets, such as loans, with shorter-term liabilities.
Fed Gets Slightly More Hawkish
Fed, in the meantime, has raised its benchmark federal funds rate by a quarter percentage point to a range of 1.75% to 2% last month. The Fed’s dot plot, in fact, indicated that policy makers predict two additional rate hikes this year for a total of four increases instead of three as planned earlier.
By the end of this year, the median forecast for the federal funds rate stands at 2.4%, compared with the March forecast of 2.1%. Beyond this year, the policy-setting Federal Open Market Committee predicts that it will hike rates three times next year and one more time the following year to propel its benchmark rate up to 3.4% (read more: Fed Lifts Rates for the Second Time in 2018: Winners & Losers).
4 Bank Stocks to Buy Heading Into Q2 Earnings
The aforesaid factors will surely help banks stay afloat this Q2. For the Finance sector, of which the Major Banks industry is the biggest earnings contributor, total Q2 earnings are expected to grow 18.4% from the same period last year on 3.8% higher revenues. This would follow 25.1% earnings growth in the preceding quarter on 4.8% higher revenues (read more: What's Keeping Bank Stocks Down?).
This calls for investing in four banks, which are expected to report a significant uptick in Q2 earnings. These stocks have a positive Earnings ESP — our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. These stocks also flaunt a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
M&T Bank Corp. operates as the holding company for Manufacturers and Traders Trust Company; and Wilmington Trust, National Association that provide retail and commercial banking services. The stock, which part of the Banks - Major Regional industry, is expected to return 34.1% this year.
The company is expected to report earnings results for the quarter ending June 2018 on Jul 18. M&T Bank has an Earnings ESP of +0.58%.
Customers Bancorp, Inc. operates as the bank holding company for Customers Bank that provides financial products and services to small and middle market businesses, not-for-profits, and consumers. The stock, which part of the Banks - Southeast industry, is expected to return 26.4% in 2018.
The company is likely to report earnings results for the quarter ending June 2018 on Jul 25. Customers Bancorp has an Earnings ESP of +3.50%.
Metropolitan Bank Holding Corp. operates as the bank holding company for Metropolitan Commercial Bank that provides a range of business, commercial, and retail banking products and services. The stock, which part of the Banks - Northeast industry, is expected to return 9.2% this year.
The company is expected to report earnings results for the quarter ending June 2018 on Jul 25. Metropolitan Bank has an Earnings ESP of +5.88%.
Triumph Bancorp, Inc. operates as a financial holding company for TBK Bank, SSB that provides banking and commercial finance products and services to retail customers and small-to-mid-sized businesses in the United States. The stock, which part of the Banks - Southeast industry, is expected to return 22.3% in 2018.
The company is expected to report earnings results for the quarter ending June 2018 on Jul 18. Triumph Bancorp has an Earnings ESP of +0.32%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.