It seems to be a wise decision to add Fifth Third Bancorp (FITB - Free Report) stock to your portfolio now, given the company’s efforts to improve efficiency and enhance revenue growth through several initiatives, including North Star initiatives. Also, its organic growth, aided by rising loans and deposits, as well as higher interest rates, bode well for the future.
Also, Fifth Third’s encouraging capital-deployment activities reflect a strong balance sheet position. Further, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in all the trailing four quarters.
The company’s Zacks Consensus Estimate for 2019 earnings has been revised slightly upward over the last 60 days. The stock currently carries a Zacks Rank #2 (Buy).
Furthermore, shares of the company have lost around 16.9% in six months’ time compared with the 13.2% decline recorded by the industry.
Fifth Third has a number of other aspects that make it an attractive investment option.
Why Fifth Third is a Must Buy
Organic Growth: Fifth Third’s diverse revenue base will likely support its earnings growth. The company has expanded its non-interest income base, which now represents more than 42% of total revenues in the first nine months of 2018. Furthermore, management expects fee income to increase in the near term. Additionally, the company remains focused on executing measures, including branch consolidation.
Earnings Strength: Fifth Third recorded earnings growth rate of 6.1% over the last three to five years. Also, earnings are expected to display an upswing in the near term, as the company’s projected EPS growth (3-5 years) is 7.2%. Additionally, Fifth Third recorded an average positive earnings surprise of 10.38%, over the trailing four quarters.
Stock is Undervalued: Fifth Third has P/E and P/B ratios of 9.05 and 1.14 compared to the industry average of 9.68 and 1.22, respectively. Based on these ratios, the stock seems undervalued.
Other Stocks to Consider
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Credit Acceptance Corporation (CACC - Free Report) has been witnessing upward estimate revisions for the past 90 days. Also, the company’s shares have surged nearly 95.8%, in the past two years. It carries a Zacks Rank of 2, at present.
E*TRADE Financial Corporation (ETFC - Free Report) has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has jumped around 25% over the past two years. It currently carries a Zacks Rank #2.
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