The broad financial sector has been a strong performer so far
in 2013, as it has been leading the market in the year-to-date
timeframe. Furthermore, the space has actually been beating out
the S&P 500 from a one year look as well, suggesting a pretty
strong trend of outperformance for this key market sector.
However, we have begun to see some new trends develop in this
corner of the market during the current earnings season as big
banks have been having a bit of trouble. Major banking
institutions have been doing quite well on earnings, but have
seen sluggish revenues, suggesting that they may have a bit of
trouble growing in the near future.
For this reason, it may be time to look elsewhere in the
financial sector for better growth candidates, and for firms that
are better poised to take advantage of current market trends. And
with the domestic economy coming back a bit, investors may want
to focus on
Private Bancorp (
for their exposure.
PVTB in Focus
While PVTB was beaten down in the financial crisis, the
company is now back on track and a tremendous value. The firm has
seen a solid start to 2013, as the stock is up about 18%
year-to-date, while its PEG ratio is still well below the
industry average at just 1.76.
Furthermore, unlike many of its peers in the space, PVTB could
see a very strong performance in terms of earnings growth in the
near future. Current expectations call for year-over-year growth
of nearly 68% for the current quarter, and an impressive 49%
growth rate for the current year.
While this might seem like a lofty target to some, it is
important to note that analysts seem pretty confident in the
firm's prospects, as all of the recent estimates have gone up.
Furthermore, the consensus earnings expectation for the current
quarter and next quarter-as well as the current year and next
year-have all gone up in the past 30 days.
This suggests that many are feeling even more optimistic about
the company in the near term, and that even better days could be
ahead for PVTB. This is especially true when investors consider
the firm's recent history when it comes to earnings surprises; it
hasn't missed in the past four quarters and has actually seen a
22% average beat in the trailing four periods.
Thanks to this confluence of factors, the stock has earned
itself a Zacks Rank of 1 or 'Strong Buy'. The company also has a
Zacks Recommendation of 'Outperform' as well as an industry rank
in the top quarter, meaning that both the short and long term
picture are looking quite well for this company.
If this impressive earnings picture wasn't enough for you,
there are a couple of other strong points that could sway you to
the bull side for this stock. According to the recent earnings
report, net revenues for the company showed growth in the
year-over-year period, suggesting that PVTB has been able to
avoid some of the top-line growth woes that have impacted its
Furthermore, there were some other encouraging stats from the
company such as its
non-interest income increasing 11%
year-over-year, thanks to more mortgage banking and syndication
fees. The firm also said that total loans grew 9% year-over-year,
so PVTB has had little trouble expanding its core business
Financials remain a strong sector
in the market, and one that continues to lead the way higher in
2013. There are a number of solid choices in the space though,
and investors have largely focused on big banks for their
However, there are a number of smaller companies that could be
better growth candidates in the near future, both from an
earnings and revenue perspective. One such firm is Private
Bancorp, and thanks to their top Zacks Rank and strong revenue
growth, they could make for a great pick for financial-focused
investors at this time.
Want the latest recommendations from Zacks Investment
Research? Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
PRIVATEBANCORP (PVTB): Free Stock Analysis
To read this article on Zacks.com click here.