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Here's Why it is Best to Hold Prosperity Bancshares Stock Now
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Prosperity Bancshares (PB - Free Report) is well-poised for organic growth, supported by its solid loan and deposit balances. Moreover, its inorganic growth efforts remain impressive and will likely continue to aid the top line.
However, because of lower interest rates, its margins will likely remain under pressure. Also, mounting operating expenses are expected to hurt profitability.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised marginally downward over the past 30 days, reflecting that analysts are not very optimistic regarding its earnings growth potential. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Over the past three months, shares of the company have gained 34.9% compared with the 31.6% rally of the industry it belongs to.
Looking at fundamentals, Prosperity Bancshares’ net revenues witnessed a five-year (2015-2019) CAGR of 2.2%, with the uptrend continuing in first-quarter 2020. Also, the company has been able to improve its deposit mix. Despite the concerns surrounding the coronavirus pandemic, continued rise in demand for loans will likely keep supporting the top line.
Moreover, over the years, the company has significantly expanded its operations through the buyout of community banks and branches of other banks. In November 2019, it acquired LegacyTexas Financial, which will likely be accretive to earnings in the upcoming quarters.
Further, given the company’s strong balance sheet position and solid earnings strength, its capital-deployment activities are expected to remain sustainable. Thus, it will continue to enhance shareholder value.
However, though Prosperity Bancshares’ net interest margin (NIM) increased in 2019, it has been persistently declining over the past several years (from 3.80% in 2014 to 3.18% in 2018). The company’s NIM is expected to remain under pressure, owing to near-zero interest rates amid the Federal Reserve’s accommodative policy stance.
Moreover, its expenses witnessed a CAGR of 6% over the last four years (ended 2019). The increase was mainly due to higher salaries and benefits expenses. Overall costs are expected to remain elevated in the near term as the company continues to invest in franchises and grow through acquisitions.
Weak performance of the mortgage banking business is another big concern for Prosperity Bancshares. Dismal mortgage performance is likely to continue in the near term, as the operating backdrop is not expected to change much.
A few stocks from the finance space worth a look are mentioned below.
West Bancorporation’s (WTBA - Free Report) earnings estimates for the current year have moved up 13.9% over the past 60 days. The company’s shares have gained 7.4% over the past three months. At present, it sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Affiliated Managers Group’s (AMG - Free Report) earnings estimates for the current year have moved 2.6% upward over the past 60 days. The stock has appreciated 51% over the past three months. The company currently carries a Zacks Rank #2 (Buy).
GAIN Capital Holdings’ earnings estimates for 2020 have increased significantly over the past 60 days. The company’s shares have gained 16.9% over the past three months. At present, it has a Zacks Rank #2.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Here's Why it is Best to Hold Prosperity Bancshares Stock Now
Prosperity Bancshares (PB - Free Report) is well-poised for organic growth, supported by its solid loan and deposit balances. Moreover, its inorganic growth efforts remain impressive and will likely continue to aid the top line.
However, because of lower interest rates, its margins will likely remain under pressure. Also, mounting operating expenses are expected to hurt profitability.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised marginally downward over the past 30 days, reflecting that analysts are not very optimistic regarding its earnings growth potential. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Over the past three months, shares of the company have gained 34.9% compared with the 31.6% rally of the industry it belongs to.
Looking at fundamentals, Prosperity Bancshares’ net revenues witnessed a five-year (2015-2019) CAGR of 2.2%, with the uptrend continuing in first-quarter 2020. Also, the company has been able to improve its deposit mix. Despite the concerns surrounding the coronavirus pandemic, continued rise in demand for loans will likely keep supporting the top line.
Moreover, over the years, the company has significantly expanded its operations through the buyout of community banks and branches of other banks. In November 2019, it acquired LegacyTexas Financial, which will likely be accretive to earnings in the upcoming quarters.
Further, given the company’s strong balance sheet position and solid earnings strength, its capital-deployment activities are expected to remain sustainable. Thus, it will continue to enhance shareholder value.
However, though Prosperity Bancshares’ net interest margin (NIM) increased in 2019, it has been persistently declining over the past several years (from 3.80% in 2014 to 3.18% in 2018). The company’s NIM is expected to remain under pressure, owing to near-zero interest rates amid the Federal Reserve’s accommodative policy stance.
Moreover, its expenses witnessed a CAGR of 6% over the last four years (ended 2019). The increase was mainly due to higher salaries and benefits expenses. Overall costs are expected to remain elevated in the near term as the company continues to invest in franchises and grow through acquisitions.
Weak performance of the mortgage banking business is another big concern for Prosperity Bancshares. Dismal mortgage performance is likely to continue in the near term, as the operating backdrop is not expected to change much.
A few stocks from the finance space worth a look are mentioned below.
West Bancorporation’s (WTBA - Free Report) earnings estimates for the current year have moved up 13.9% over the past 60 days. The company’s shares have gained 7.4% over the past three months. At present, it sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Affiliated Managers Group’s (AMG - Free Report) earnings estimates for the current year have moved 2.6% upward over the past 60 days. The stock has appreciated 51% over the past three months. The company currently carries a Zacks Rank #2 (Buy).
GAIN Capital Holdings’ earnings estimates for 2020 have increased significantly over the past 60 days. The company’s shares have gained 16.9% over the past three months. At present, it has a Zacks Rank #2.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>