Improving operating backdrop, higher interest rates, easing of regulations, decent loan demand and lower tax rates continue supporting banking stocks. Keeping this in mind, we have selected
PFBC for your consideration.
Further, analysts are bullish on the stock. The Zacks Consensus Estimate for current-year earnings has been revised nearly 1% upward over the past 60 days. As a result, the stock currently carries a Zacks Rank #2 (Buy).
So far this year, shares of Preferred Bank have rallied 9.2% compared with 14% rise of the industry it belongs to.
Why Preferred Bank is an Impressive Pick
Earnings strength: Preferred Bank recorded an earnings growth rate of 25.7% over the past three to five years, higher than the industry’s growth of 14.2%. The momentum is expected to continue as the company’s earnings are projected to rise 14.1% and 6.8% in 2019 and 2020, respectively.
Moreover, the long-term (three-five years) expected EPS growth of 10% promises rewards for its shareholders.
Revenue growth: Preferred Bank has been witnessing consistent improvement in revenues over the past few years. Revenues witnessed a CAGR of 18.2% over the last five years (2014-2018). Further, the top line is expected to increase 9.2% in 2019 and 8.8% in 2020.
Superior Return on Equity (ROE): Preferred Bank’s ROE is 17.69%, higher than the industry average of 11.79%. This reflects its superiority in terms of utilizing funds.
Stock trades at a discount: Preferred Bank stock looks undervalued with respect to its PEG and price-to-earnings (P/E) ratios. It has a PEG ratio of 0.88 compared with the industry average of 1.44. Also, P/E ratio of 8.85 is below the industry average of 11.51.
Further, the stock currently 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 a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Other Stocks to Consider
Some other top-ranked finance stocks are E*TRADE Financial Corporation ETFC, LPL Financial Holdings Inc. LPLA and Credit Acceptance Corporation CACC. All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here .
Earnings estimates for E*TRADE Financial have been revised marginally upward for 2019 over the past 60 days. Its share price has rallied 10.4% so far this year.
LPL Financial’s earnings estimates have been revised upward by 2.1% for the current year over the past 60 days. Also, so far this year, its share price has increased 18.6%.
Credit Acceptance has witnessed upward earnings estimate revision of 2.2% for the current fiscal year over the past 60 days. Also, its share price has seen a 17.5% rise so far this year.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Preferred Bank (PFBC) : Free Stock Analysis Report
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