Yahoo Finance 5 Reasons Why Cullen/Frost (CFR) Stock is Worth Buying Now
Cullen/Frost Bankers, Inc. CFR is a promising stock right now, backed by its organic growth strategies and a strong balance sheet position that poises it well for growth. Revenue growth prospects and sustainable capital deployment moves make it an attractive pick.
Earnings estimates for the company have been witnessing upward revisions, reflecting analysts’ optimism regarding its earnings growth potential. Over the past month, the Zacks Consensus Estimate for CFR’s earnings has been revised 7.3% and 9.7% upward for 2022 and 2023, respectively. The company currently sports a Zacks Rank #1 (Strong Buy).
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The stock has rallied 12% over the past three months, outperforming the industry’s rise of 1.7%.
A few other factors, which make CFR an attractive investment option now, are mentioned below.
Earnings Growth: In the last three-five years, CFR’s earnings witnessed growth of 7%. In 2022 and 2023, the company’s earnings are projected to witness growth of 27.2% and 25.8%.
Also, the company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 9.2%.
Revenue Strength: The company’s revenues witnessed a compound annual growth rate (CAGR) of 16.4% over the last four years (2018-2021), with a rising trend in the first nine months of 2022. This was backed by net interest income (NII) and fee income growth.
Going forward, rising rates, decent loan growth and exposure to non-interest-bearing might boost NII and margin. Management expects growth in NII, on a tax-equivalent basis (excluding the Paycheck Protection Program or PPP), to exceed the low-20% range in 2022. Hence, we believe that the company is well-positioned to maintain its increasing revenue trend, going forward.
Expansion Efforts: The company is enhancing its presence in the lucrative Texas markets. In the second quarter of 2021, Cullen/Frost completed its 25-branch expansion program in the Houston region. It expects more locations to open in 2022 and 2023. Capitalizing on the success of its footprint growth in Houston, CFR planned a similar 28-branch expansion in Dallas. Given the pro-business and a low-tax scenario, along with compelling demographics in the region, such efforts are apt and will likely drive deposit and loan growth for Cullen/Frost.
Robust Balance Sheet: Cullen/Frost exhibits a strong balance sheet position. Its deposit base witnessed a six-year CAGR of 10.6% (2016-2021), while loans witnessed a CAGR of 18.7% in the same time frame. Cullen/Frost made good progress toward adding residential mortgages to its current suite of consumer real-estate products, complementing home equity.
Encouraging Capital Deployment: We remain encouraged by Cullen/Frost’s steady capital deployment activities. It has increased dividends annually for 28 consecutive years. In January 2022, Cullen/Frost’s board of directors authorized a $100-million stock repurchase plan for a year. This reflects the company’s commitment to returning value to its shareholders. With decent liquidity, such activities are sustainable for the future.
Other Key Bank Picks
A couple of other bank stocks worth a look are Hancock Whitney Corporation HWC and F.N.B. Corporation FNB. At present, both HWC and FNB carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Hancock Whitney’s 2022 earnings has moved marginally upward over the past 30 days. So far this year, HWC’s shares have gained 7.6%.
The Zacks Consensus Estimate for F.N.B. Corp’s 2022 has been unchanged over the past 30 days. FNB’s shares have rallied 13.5% in the year-to-date period.
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CullenFrost Bankers, Inc. (CFR) : Free Stock Analysis Report
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