We upgraded our long-term recommendation on
Washington Federal Inc.
) to Outperform from Neutral based on its efficient capital
Rationale behind the Upgrade
Washington Federal's fiscal fourth-quarter 2013 earnings (ended
Sep 30) came in at 41 cents, beating the Zacks Consensus Estimate
by a nickel. The reported figure also compared favorably with 33
cents earned in the year-ago quarter. The company has delivered
positive earnings surprises in the past four quarters with an
average beat of 7.3%.
Over the last 60 days, the Zacks Consensus Estimate for fiscal
2014 has gone up 1.9% to $1.59 per share. Moreover, the Zacks
Consensus Estimate for fiscal 2015 rose nearly 1% to $1.66 per
share over the same time frame. Hence, Washington Federal now has
a Zacks Rank #1 (Strong Buy).
Washington Federal's earnings streak, along with its consistent
trend of returning capital to shareholders makes it an attractive
pick for yield-seeking investors. In fiscal 2013, the company
returned 98% of its net income to shareholders in the form of
dividends and share buybacks.
Washington Federal continues to increase its market share through
strategic acquisitions. Considering the strong capital and
liquidity position, we believe that the company is well-poised to
continue inorganic expansion.
Further, the company has witnessed a long-term uptrend for loans
and deposits. With the market scenario improving and investors
gaining confidence, demand for loans will continue to increase,
Other Stocks Worth Considering
Other financial organizations worth considering include
Flagstar Bancorp Inc.
Great Southern Bancorp Inc.
Investors Bancorp Inc.
). All these stocks carry the same Zacks Rank as Washington
FLAGSTAR BANCP (FBC): Free Stock Analysis
GREAT SOUTH BCP (GSBC): Free Stock Analysis
INVESTORS BANCP (ISBC): Free Stock Analysis
WASH FEDL INC (WAFD): Free Stock Analysis
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