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6 Reasons to Add Zions (ZION) Stock to Your Portfolio Now

Zions Bancorporation ZION seems to be a solid bet now, based on strong fundamentals and good growth prospects. Easing margin pressure, restructuring initiatives and efficient cost control position the company well for growth. The bank’s focus on enhanced capital deployment plans is also encouraging.

Its shares have gained 17.5% in a year’s time, outperforming 8.5% growth for the industry it belongs to.

While, the company’s Zacks Consensus Estimate for the current-year earnings has remained stable over the last 30 days, the stock currently carries a Zacks Rank #2 (Buy) based on strength in its fundamentals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



A few factors that make Zions an attractive investment option are mentioned below:

Earnings per Share (EPS) Growth: Zions has witnessed nearly 8.3% growth in EPS over the last three-five years. This earnings momentum is likely to continue in the near term, as reflected by the company’s projected EPS growth rate of 40.8% and 11.8% for 2017 and 2018, respectively.

Also, the company’s long-term (three-five years) estimated EPS growth rate of 9.3% promises rewards for investors.

Revenue Strength: Zions’ net revenues have witnessed a CAGR of 2.7% in the last four years (2013-2016), driven by consistent growth in loans. With favorable macroeconomic developments and continued rise in demand for loans, the bank should witness further increase in revenues. The company’s projected sales growth (F1/F0) of 10.2% ensures continuation of the upward revenue trend.

Focus on Cost Control: Zions has been successful in lowering its non-interest expenses through several initiatives. The company’s expenses have declined at a four year (2013-2016) CAGR of 2.6%. Despite projecting a slight increase in expenses in 2017, management remains committed to driving efficiency ratio to low 60s.

Impressive Capital Deployment Activities: Driven by its capital strength, Zions’ capital deployment activities are impressive. Additionally, the company has been lowering its preferred equity with an aim to further augment the return on equity and strengthen its balance sheet.

Strong Leverage: Zions’ debt/equity ratio is 0.05 versus the industry average of 0.18, indicating a relatively lower debt burden. It also indicates the company’s financial stability even in adverse economic conditions.

Stock Seems Undervalued: With respect to the price-to-book (P/B) and price-to-sales (P/S) ratios, Zions looks undervalued. The company’s P/B ratio of 1.42 is below the industry average of 1.79. Also, the P/S ratio for the company is 3.85 compared with the industry average of 4.24.

Additionally, Zions has a Value Score of B. 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. Our research shows that stocks with Style Scores of A or B, when combined with Zacks Rank #1 or 2, offer the best upside potential.

Other Stocks to Consider

Other stocks in the same space worth considering are SVB Financial Group SIVB, Preferred Bank PFBC and East West Bancorp, Inc. EWBC, each carrying a Zacks Rank of 2.

SVB Financial’s earnings estimates for the current year have been revised 5.4% upward over the last 60 days. Also, its shares have gained 36.7% in a year’s time.

Preferred Bank’s current-year earnings estimates have been revised nearly 1% upward over the last 60 days. Its shares have gained 14.3% in the last year.

East West Bancorp’s current-year earnings estimates have remained stable over the last 60 days. Its share price has increased 19.6% in the last year.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>


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Zions Bancorporation (ZION) : Free Stock Analysis Report
 
Preferred Bank (PFBC) : Free Stock Analysis Report
 
SVB Financial Group (SIVB) : Free Stock Analysis Report
 
East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report
 
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