On Mar 28, 2014, we issued an updated research report on
Prosperity Bancshares Inc.
). Although the company has been growing organically as well as
through acquisitions, higher operating expenses remain a drag.
Acquisitions have been a major part of Prosperity Bancshares'
growth strategy. Over the years, the company has grown through
acquiring banks and branches. Additionally, the company's
revenues have been increasing driven by rise in loan and deposit
balances. Further, given its strong capital position, we
anticipate the company to continue with its dividend payouts
Moreover, Prosperity Bancshares reported better-than-expected
fourth-quarter 2013 results, based on improvement in top line,
partially offset by rise in expenses and provisions. Further,
healthy growth in loans and deposits, along with improved
profitability ratios, were tailwinds for the quarter.
Following the earnings release, analysts have remained bullish on
Prosperity Bancshares as evident from the upward revisions in the
Zacks Consensus Estimate for 2014 and 2015. Over the last 90
days, for 2014, the Zacks Consensus Estimate increased 3.5% to
$4.14 per share and for 2015, it rose 2.8% to $4.41 per share.
Hence, Prosperity Bancshares now has a Zacks Rank #2 (Buy).
On the flip side, continued pressure on net interest margin (NIM)
and rising non-interest expenses remain major concerns for
Prosperity Bancshares. Also, with the changes in the financial
services industry and stringent regulations, the company's
profitability will likely suffer due to increased costs and fee
Stocks That Warrant a Look
Some better-ranked banking stocks include
SVB Financial Group
Central Valley Community Bancorp
Central Pacific Financial Corp.
). All of these sport a Zacks Rank #1 (Strong Buy).
CENTRAL PAC FIN (CPF): Free Stock Analysis
CENTRAL VLY COM (CVCY): Free Stock Analysis
PROSPERITY BCSH (PB): Free Stock Analysis
SVB FINL GP (SIVB): Free Stock Analysis
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