It seems to be a wise idea to add Bank OZK (OZK - Free Report) stock to your portfolio now, given its solid liquidity position, continued rise in loan and deposit balances, and organic and inorganic growth strategy.
The Zacks Consensus Estimate has moved nearly 1% higher for 2019 over the past 60 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Bank OZK’s price performance also looks encouraging. Its shares have rallied 28.7% in the past three months.
What Makes Bank OZK Stock a Solid Bet
Earnings strength: Bank OZK’s earnings have grown at the rate of 23.4% over the past three to five years. With favorable operating backdrop, the momentum is expected to continue in the near term. The company’s earnings are expected to grow 6.8% and 4.4% in2019 and 2020, respectively.
Further, its long-term (three-five years) estimated EPS growth rate of 12% ensures rewards for shareholders.
Further, the stock has a Growth Score of B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2,offer the best upside potential.
Revenue growth: Bank OZK has grown substantially through de novo branching strategy and inorganically. Over the last five years (2014-2018), the company’s revenues witnessed a CAGR of 29.5%. Given its strong balance sheet position, the bank is expected to continue expanding through acquisitions. It also plans to open additional branches in new and existing markets.
The company’s projected consensus sales growth rate of 3.4% and 6.8% for 2019 and 2020, respectively, indicates continued upward momentum in revenues.
Impressive capital deployments: Bank OZK has been regularly increasing its quarterly dividend. In January 2019, it hiked dividend for the 34th consecutive quarter. Given the robust capital position, lower debt equity and dividend payout ratios compared with its peers, the company is expected to sustain its capital deployment activities. Hence, it is likely to continue enhancing shareholder value.
Strong leverage: Bank OZK’s debt/equity ratio is 0.12 compared with the industry average of 0.44. The relatively strong financial health of the company should help it perform better than its peers amid a dynamic business environment.
Superior Return on Equity (ROE): Bank OZK’s trailing 12-month ROE reflects its superiority in terms of utilizing shareholder funds compared with its peers. The company has an ROE of 11.45%, higher than the industry average of 10.27%.
Stock looks undervalued: Bank OZK’s looks undervalued when compared with the broader industry. Its current price/earnings (F1) and price/book ratios are below the respective industry averages.
The stock currently has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Other Stocks Worth Considering
Webster Financial Corporation (WBS - Free Report) haswitnessed a marginal upward revision in its Zacks Consensus Estimate for 2019, over the past 60 days. This Zacks Rank #2 stock has rallied 3.8% over the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, Sterling Bancorp’s (STL - Free Report) earnings estimates for the current year have been revised marginally upward. Over the past three months, its shares haverallied 11.7%. The stock carries a Zacks Rank #2.
Over the past 60 days, First Commonwealth Financial Corporation (FCF - Free Report) has witnessed a slight upward earnings estimate revision for 2019. Also, its shares have gained 6.2% over the past three months. The stock carries a Zacks Rank #2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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