Western Alliance Bancorporation (WAL - Free Report) appears to be a solid bet now, driven by strong fundamentals and promising prospects. Moreover, the company's steady capital deployments reflect a strong balance sheet position.
Further, analysts seem to be optimistic about the company as the stock is witnessing upward estimate revisions. The Zacks Consensus Estimate for earnings has moved marginally upward over the past 60 days for both 2019 and 2020. Backed by positive estimate revisions and strong fundamentals, the company currently carries a Zacks Rank #2 (Buy).
Also, its price performance is impressive. The stock has rallied 28.7% in the past six months, outperforming the industry’s rise of 11.7%.
What Makes Western Alliance Stock a Solid Pick
Earnings strength: Western Alliance has recorded an earnings growth rate of 25% over the past three to five years compared with the industry average of 16%. Continuing the momentum, the earnings growth rate is expected to be 15.5% and 2.7% for 2019 and 2020, respectively.
Further, the company’s long-term (three to five years) estimated earnings growth rate of 15% promises rewards for investors in the long run.
Revenue growth: Western Alliance continues to make steady progress toward improving its top line. Its revenues recorded a five-year (ended 2018) CAGR of 25%. Also, the company’s loan and deposit balance remains strong. This, along with a favorable operating backdrop, will continue to support its financials.
The company’s projected sales growth rate of 7.4% for 2019 indicates continued upward momentum in revenues.
Robust capital deployment plan: Western Alliance has an impressive capital deployment plan in place. The bank initiated regular quarterly dividends, effective third- quarter 2019.
Further, it continues to return capital to shareholders through share repurchases. Given the strong balance sheet position and earnings strength, the bank will be able to sustain its capital deployment actions.
Superior Return on Equity: Western Alliance has a return on equity of 17.65% compared with the industry average of 11.32%. This indicates that the company reinvests more efficiently compared to its peers.
Favorable VGM Score: Western Alliance has a VGM Score of B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Stock looks undervalued: Western Alliance looks undervalued when compared with the broader industry. Its current price/earnings (F1) and PEG ratios are below the respective industry averages.
Also, the stock has a Value Score of B. 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.
Other Stocks to Consider
F.N.B. Corporation (FNB - Free Report) has witnessed upward earnings estimate revisions for 2019 over the past 60 days. Moreover, this Zacks #2 Ranked stock has rallied 6.7% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hilltop Holdings Inc. (HTH - Free Report) 2019 earnings estimates have been revised upward over the past 60 days. Further, the company’s shares have gained 15% over the past six months. At present, it carries a Zacks Rank of 2.
Franklin Financial Network, Inc. (FSB - Free Report) earnings estimates for 2019 have moved north in 60 days’ time. Additionally, the stock has appreciated 19.9% over the past six months. It currently carries a Zacks Rank #2.
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