Yahoo Finance 4 Reasons Why Pathward Financial (CASH) is a Wise Pick Now
Pathward Financial, Inc. CASH is expected to enjoy balance sheet growth, supported by the rise in loan demand and stable deposit base. This, along with low leverage, indicates that it might be prudent to add the stock to your portfolio now.
Analysts seem to be optimistic regarding the company’s earnings growth prospects. In the past 30 days, the Zacks Consensus Estimate for CASH’s fiscal year earnings has moved 1.7% upward. The company currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking at its price performance, in the year-to-date period, shares of Pathward Financial have gained 7.3% against the industry’s 26.7% fall.
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Here are some other factors that make CASH a viable investment option right now:
Earnings Strength: Over the past three to five years, Pathward Financial recorded earnings growth of 21.7%, higher than the industry average of 12.8%. The rising trend is likely to continue in the upcoming years as well. The company’s earnings are projected to rise 27% for fiscal 2023 and 13% for fiscal 2024.
CASH has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
Balance Sheet Growth: CASH’s deposits have witnessed a compound annual growth rate (CAGR) of 11.1% over the last three years (ended fiscal 2022). Deposits remained stable in second-quarter fiscal 2023. This is in sharp contrast to other banks that witnessed deposits decline owing to the regional banks’ fallouts this March. The company’s differentiated Banking-as-a-Service (BaaS) model has been advantageous as it offers stable and low-cost funding via partner relationships. A stable funding base will enable the company to remain active on the lending front. In fact, total loans and leases of $3.72 billion as of the fiscal second-quarter end witnessed 6% sequential growth. The continuation of such trends will fortify CASH’s balance sheet.
Strong Leverage: Currently, CASH has a debt/equity ratio of 0.05. This compares favorably with the industry average of 0.34. Given the relatively low debt/equity ratio than its peers, the company is expected to be financially stable, even in adverse economic conditions.
Favorable Return on Equity (ROE): CASH’s trailing 12-month return on equity (ROE) indicates its growth potential. The company’s ROE of 20.8% compares favorably with 12.23% for the industry. Thus, this reflects that the company is more efficient in using shareholder funds.
Other Stocks Worth Considering
A couple of better-ranked stocks from the banking space are Mitsubishi UFJ Financial Group, Inc. MUFG and The Bancorp. TBBK, currently carrying a Zacks Rank #2 and Zacks Rank #1, respectively.
Earnings estimates for MUFG have been revised 1.3% upward for 2023 over the past 60 days. The company’s shares have gained 28.7% over the past six months.
The consensus estimate for TBBK 2023 earnings has been revised 6.5% upward over the past 30 days. Over the past six months, the company’s share price has increased 2.2%.
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Mitsubishi UFJ Financial Group, Inc. (MUFG) : Free Stock Analysis Report
