OZK has announced an increase in its regular quarterly cash dividend. The company announced a dividend of 23 cents per share, indicating a 4.5% rise from the previous payout. The dividend will be paid on Apr 22, to shareholders on record as of Apr 15.
This marks 35 consecutive quarters of dividend hike by the company. Based on the latest hike, Bank OZK’s dividend yield now stands at 3.1%, considering last day’s closing price of $30.09. The yield is not only attractive for income investors but also represents a steady stream of income.
Also, over the past three months, shares of Bank OZK have rallied 27.2%, compared to 8.5% rise registered by the industry.
So, is this Zacks Rank #2 (Buy) stock worth adding to the portfolio, based on the latest dividend hike? Let’s dig deeper into its fundamentals and financial strengths to understand better.
Earnings Growth : Bank OZK has recorded earnings growth of 23.4%, in the last three to five years. This momentum is likely to continue in the near term as indicated by the company’s projected earnings per share (EPS) growth of 6.8% for 2019 and 3.3% for 2020.
Also, Bank OZK’s long-term (three-five years) estimated EPS growth rate of 12% promises rewards for investors.
Growth Score : Moreover, the stock has a Growth Score of B. 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.
Revenue Growth : Bank OZK has grown substantially through its de novo branching strategy as well as inorganically. The company witnessed a compound annual growth rate of 33.9% over a five-year period (2014-2018).
Further, given its strong balance-sheet position, the company will likely continue expanding through acquisitions, as well as by adding branches in new and existing markets. Its projected sales growth of 3.4% for 2019 and 6.8% for 2020 indicate continued improvement in revenues.
Superior ROE : Bank OZK’s trailing 12-month return on equity (ROE) reflects its superiority, in terms of utilizing shareholders’ fund. The company’s ROE of 11.45% compares favorably with the industry’s 10.27%.
Trades at a Discount : Based on its price-to-book (P/B) and price-to-earnings (P/E) ratio, Bank OZK is currently trading at a discount to the industry it belongs to. The company’s P/B ratio of 0.98 compares favorably to the industry average of 1.22. Furthermore, its P/E ratio of 8.38 comes in
lower than the industry average of 11.10.
Moreover, Bank OZK has a Value Score of A. 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.
Leverage : Bank OZK’s debt/equity ratio is 0.12 versus the industry average of 0.44 indicates a relatively lower debt burden.
Investing in Bank OZK at present seems to be a wise decision, given the solid revenue and earnings growth prospects, strong liquidity position and improved capital-deployment activities.
Other Key Picks
The Bank of Princeton’s BPRN shares have yielded 13.9%, over the past three months. Also, the company’s earnings estimate for the current year has been revised 6.4% upward over the past 60 days. The stock sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here .
Atlantic Capital Bancshares, Inc’s ACBI shares have rallied 5.9%, in three months’ time. Further, the company’s earnings estimate for the ongoing year moved 4.6% north in the past 60 days. The stock carries a Zacks Rank of 2, currently.
Bankwell Financial Group, Inc’s BWFG shares have gained 1.7%, in the past three months. In addition, this Zacks #2 Ranked company’s earnings estimate for 2019 moved up 1.8%, in 60 days’ time.
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