In the Q2 earnings season, the Finance sector turned out to be one of the best performers. Particularly, benefits from a stabilizing economy and improving interest-rate scenario have well positioned the banking industry. Further, lower commercial tax rate are likely to boost banks’ profitability further.
In addition, relieving banks from some of the stringent requirements of the Dodd-Frank Act has made the companies optimistic of future earnings growth and raised investors’ sentiments as well. So, we thought of picking a stock from the sector that reflects strong fundamentals and has solid long-term growth opportunities.
BOK Financial Corporation (BOKF - Free Report) is one such stock that not only beat estimates this season, but has also been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 60 days, the Zacks Consensus Estimate for 2018 and 2019 moved up around 2.4% and 2%, respectively.
Further, shares of this Zacks Rank #2 (Buy) company have gained around 10.6% year to date, outperforming 0.4% growth recorded by the industry.
Notably, BOK Financial has a number of other aspects that make it an attractive investment option.
Why BOK Financial is an Attractive Pick?
Revenue Strength: BOK Financial’s revenues witnessed a CAGR of 7.4% over the last four years (2014-2017). Also, the top line is expected to be up nearly 4% in 2018.
Additionally, the company has been witnessing impressive loan growth for the last few years, despite a tough industry backdrop. Management expects this trend to continue even in the quarters ahead. A steady growth in loans will likely support revenue generation, going ahead.
Earnings Growth: BOK Financial witnessed EPS growth of 2.6% in the last three-five years. This earnings momentum is expected to continue in the near term as reflected by the company’s projected EPS growth (F1/F0) of 30.1%.
Also, the company’s long-term (three-five years) estimated EPS growth rate of 8% promises reward for investors over the long run. Additionally, it recorded an average positive earnings surprise of 0.21% in the preceding four quarters.
Stock is Undervalued: BOK Financial has P/E and P/S ratios of 14.86 and 3.88, respectively, compared with the industry average of 16.05 and 4.05. Based on these ratios, the stock seems undervalued.
Superior Return on Equity (ROE): BOK Financial’s ROE of 11.04%, compared with the industry average of 9.51%, highlights the company’s commendable position over its peers.
Stocks to Consider
SunTrust Banks, Inc. (STI - Free Report) has been witnessing upward estimate revisions, for the last 60 days. Year to date, the company’s share price has been up more than 13%. It currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica Incorporated (CMA - Free Report) has been witnessing upward estimate revisions for the last 60 days. In addition, the stock has jumped more than 11% so far, this year. It sports a Zacks Rank of 1, at present.
M&T Bank Corporation (MTB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 3.1% year to date. It currently carries a Zacks Rank #2.
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