BOFI Holding: A Strong Buy - Analyst Blog


On Sep 13, 2013, Zacks Investment Research upgraded BOFI Holding Inc. ( BOFI ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

BOFI has been experiencing rising earnings estimates on the back of improved fourth-quarter and full-year 2013 results. Moreover, improved deposit mix and loan portfolio as well as expanded lending business have been impressive.

Additionally, this national bank delivered positive earnings surprise in all the 4 quarters of fiscal 2013, with an average beat of 4.66%. BOFI also outperformed the year-to-date Nasdaq index, which posed a 25.5% increase against a robust return of 134.9% for the company.

On Aug 7, Eastern Insurance reported fourth-quarter 2013 operating earnings per share of 78 cents, which outpaced the Zacks Consensus Estimate by 2 cents and the year-ago quarter number by 21.9%.

Lower interest expense and provision of loan losses led to 29.6% year over year growth in net interest income, whereas non-interest income surged 59% despite higher non-interest expense. BOFI's assets and loan quality also remained strong, whereas both loan portfolio and deposits witnessed growth of about 30% each.

Additionally, capital ratios remained sturdy with Tier 1 risk-based capital of 14.52% at the end of fiscal 2013 against 13.69% in the prior year period. Even book value per share increased 21.12% year over year to $19.16.

Further, the acquisition of $200 million worth of deposits from Principal Bank is further expected to boost BOFI's clientele and overall online banking business, which is rapidly gaining traction due to convenience and security of the consumers. Internet banking also makes the bank's operations less capital intensive.

Riding on a strong core fundamental growth trend, BOFI's well-diversified business model is resilient enough to cater to the changing market demands. Alongside strong capitalization, a healthy balance sheet and consistent record earnings growth scores well in retaining investor confidence.

Based on BOFI's fundamental strength and capital management, the Zacks Consensus Estimate for fiscal 2014 rose 8% to $3.65 per share in the last 30 days. Meanwhile, no downward revision in estimates was witnessed for the year.

Other Stocks to Consider

Apart from BOFI, other outperformers in the financial services industry include Glacier Bancorp Inc. ( GBCI ), East West Bancorp ( EWBC ) and Preferred Bank ( PFBC ). All the stocks carry a Zacks Rank #1 (Strong Buy).

BOFI HLDG INC (BOFI): Free Stock Analysis Report

EAST WEST BC (EWBC): Free Stock Analysis Report

GLACIER BANCORP (GBCI): Free Stock Analysis Report

PREFERRED BANK (PFBC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BOFI , EWBC , GBCI , PFBC

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