East West Bancorp, Inc. EWBC continues to reward shareholders through dividend hikes or share repurchases. The company recently announced a share-buyback plan, with authorization to repurchase common shares worth $500 million.
Notably, the latest authorization includes $100 million worth of shares that are currently outstanding.
East West Bancorp has also been paying quarterly dividends along with some hikes. In April 2019, the company hiked its dividend by 20%, which followed a 15% increase announced in July 2018. Prior to this, it raised its dividend by 11.1% in January 2015.
Shares of East West Bancorp have lost 10.2% in the past six months against 2.3% growth recorded by the industry.
Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With strong liquidity and capital position, we believe East West Bancorp will continue to reward its shareholders in the days to come. Let’s dig deeper into its financials and fundamental strength.
Stock is Undervalued: With respect to its price-to-earnings (P/E) and price-to-cash flow (P/CF) ratios, East West Bancorp looks undervalued. The company’s P/E (F1) ratio of 8.60 comes in below the industry average of 11.33. Also, its P/CF ratio is 7.10 compared with the industry average of 9.53.
Revenue Strength: East West Bancorp remains focused on its organic growth strategy. The company’s net interest income (NII), which is the primary source of its revenues, witnessed a CAGR of 11.5% over the last five years (2015-2019). Moreover, the company’s projected sales growth rates of 0.1% for 2020 and 5.3% for 2021 indicate constant upward momentum in revenues.
Earnings Growth: The company witnessed earnings growth of 17.1% in the last three to five years, higher than the industry average of 15.6%. The uptrend is expected to continue in the near term as evidenced from its projected EPS growth rates of 2% and 5.6% for 2020 and 2021, respectively.
During the current quarter, among other finance stocks, Popular, Inc. BPOP, Stifel Financial Corp. SF and Jefferies Financial Group Inc. JEF also announced share-repurchase authorizations.
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