Despite the coronavirus outbreak-induced economic uncertainty, it seems to be a wise idea to add AllianceBernstein Holding L.P. (AB - Free Report) stock to your portfolio now, given its strong fundamentals and promising prospects.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised nearly 1% upward over the past 30 days, reflecting analysts’ optimism regarding its earnings growth potential. Thus, AllianceBernstein currently sports a Zacks Rank #1 (Strong Buy).
Also, its price performance seems impressive. The stock has gained 37.3% in the past three months, outperforming the industry’s rally of 28.4%.
Thus, given the strength in fundamentals and positive estimate revisions, the stock is expected to gain further.
Mentioned below are some other factors that make AllianceBernstein an attractive investment option now.
Revenue Growth: Organic growth remains a key strength for the company. AllianceBernstein’s revenues have witnessed a six-year (2014-2019) CAGR of 3.2%. Given a solid AUM balance, the top line is expected to grow further despite the current uncertain economic environment resulting from the coronavirus outbreak.
While the company’s revenues are projected to decline 1.8% in 2020, the same is expected to grow at the rate of 6.4% in 2021.
Earnings Strength: AllianceBernstein witnessed earnings growth of 9.5% in the last three to five years, higher than the industry average of 7%.
While earnings are projected to decline 6.4% in 2020, the same will likely grow 7% in 2021. Moreover, the company’s long-term (three to five years) projected earnings growth rate of 15.5% promises reward for investors.
Superior Return on Equity (ROE): AllianceBernstein has an ROE of 17.20%, better than the industry average of 12.55%. This shows that the company reinvests its cash more efficiently compared with peers.
Strong Leverage: AllianceBernstein’s debt/equity ratio indicates that it does not use debt to finance operations. Its debt/equity ratio is nil compared with the industry average of 0.25. This highlights the company’s financial stability even in an unstable economic environment.
Favorable Valuation: AllianceBernstein currently seems undervalued when compared with the broader industry. The company has a PEG ratio of 0.70, below the industry average of 1.57. Also, its price/sales (P/S) ratio of 0.69 is lower than the industry average of 1.89.
Moreover, the stock 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. Also, our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Other Stocks to Consider
Merchants Bancorp’s (MBIN - Free Report) current-year earnings estimates have moved 11.9% upward over the past 60 days. The stock has depreciated 15% over the past six months. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
GAIN Capital Holdings’ (GCAP - Free Report) current-year earnings estimates have moved up significantly over the past 60 days. Further, the company’s shares have gained 48.5% over the past six months. At present, it has a Zacks Rank #2.
West Bancorporation’s (WTBA - Free Report) current-year earnings estimates have moved up 13.9% over the past 60 days. The company’s shares have declined 30.6% over the past six months. At present, it sports a Zacks Rank of 1.
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