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6 Reasons Why Bank of the Ozarks is a Solid Pick Now

Over the last few weeks, banking stocks got hammered by overall negative sentiments for the sector. Growing concerns - weak domestic economic data, slowdown in global growth, stress in energy-related loan portfolios, uncertainty over further rates hikes, worsening bank profitability and capital strength, and tighter credit markets - had led to huge sell-off in the banking stocks.

Nevertheless, markets have since stabilized and banking stocks have again started gaining investors' confidence. But all the same, you should exercise caution while selecting banking stocks for your portfolio.

We have chosen one such stock - Bank of the Ozarks, Inc.OZRK - for you to consider based on its strong fundamentals and prospects.

Why is it a Solid Choice?

Revenue Strength: Bank of the Ozarks' revenues have risen at a compounded annual growth rate ("CAGR") of 25.9% over the last 5 years (2011-2015). The sturdy top-line increase was backed by its de novo branching strategy as well as inorganic growth.

Additionally, the company's projected sales growth (F1/F0) of 61.91% (compared with the industry average of 1.25%) ensures continuation of the upward trend in revenues.

Earnings Per Share Growth: Bank of the Ozarks has witnessed earnings per share CAGR of 9.2% over the last 5 years (2011-2015). Also, the company has a decent earnings surprise history, having delivered positive surprises in three of the trailing four quarters with an average beat of 2.05%.

Further, this earnings momentum will likely continue in the near term as reflected by the company's projected EPS growth (F1/F0) of 21.44% compared with the industry average rate of 10.78%.

Solid Dividend Yield: Bank of the Ozarks' capital-deployment activities remains impressive. The company has been steadily increasing its quarterly dividend. Based on yesterday's closing price of $38.91 per share, the company's current dividend yield is 1.12%.

Superior Return on Equity (ROE): Bank of the Ozarks' ROE of 14.15%, as compared with the industry average of 8.15%, reflects the company's commendable position with respect to its peers.

Strong Leverage: Bank of the Ozarks' debt/equity ratio stands at 0.21 compared with the industry average of 0.34, indicating relative lower debt burden. It indicates the company's financial stability even amid an unstable economic environment.

Favorable Zacks Rank: Bank of the Ozarks currently carries a Zacks Rank #2 (Buy). This is driven by upward revision in the Zacks Consensus Estimate, which rose 3.3% for 2016 and 3.9% for 2017, over the last 30 days.

Other Stocks Worth a Look

Other stocks worth considering in the financial sector include SVB Financial Group SIVB , Western Alliance Bancorporation WAL and BofI Holding, Inc. BOFI . All three stocks hold the same Zacks Rank as Bank of the Ozarks.

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 >>

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

BANK OZARKS (OZRK): Free Stock Analysis Report

WESTERN ALLIANC (WAL): Free Stock Analysis Report

SVB FINL GP (SIVB): Free Stock Analysis Report

BOFI HLDG INC (BOFI): 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 Nasdaq, Inc.


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

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