Markets

Hancock Tumbles to 52-Week Low: What's Pulling it Down?

An image of a stock chart with a coin on top of it
Credit: Shutterstock photo

Shares of Hancock Holding CompanyHBHC slumped to a new 52-week low of $23.35 in the first hour of trading on Dec 18. The stock recovered marginally to close at $24.05, reflecting a negative year-to-date return of 21.7%. The trading volume for the session was 5.4 million shares.

Since late Jun 2015, shares of this Zacks Rank #3 (Hold) stock has been trending down. Hancock's exposure to energy-related loans is taking the shine off its financials.

Also, downward estimate revisions over the last 60 days added to its woes. Analysts have become bearish on Hancock's growth perspective, thereby leading to the fall in estimates. The Zacks Consensus Estimate for 2015 and 2016 has declined 2.4% and 7%, respectively.

A persistent slide in oil prices has become a major concern for Hancock, compelling it to raise its energy allowance for the fourth quarter of 2015. The company announced an increase of nearly $42 million in allowance for loan losses within its energy portfolio. This will bring the total energy allowance to approximately $77.5 million or 4.84% of energy loans as of Dec 31, 2015.

Moreover, Hancock anticipates net charge-offs (NCOs) from energy loans to rise to $3.5 million in the fourth quarter, up substantially from NCOs of less than $1 million through the third quarter of 2015. Further, total provision for loan losses is anticipated in a range of $48-$52 million for the fourth quarter.

The absence of a rebound in oil prices will continue to lead to underperforming energy loans. Hence, Hancock's financials will likely remain under pressure due to a persistent fall in oil prices.

Key Picks in the Sector

Better-ranked South-east banks include Bank of the Ozarks, Inc. OZRK , Capital Bank Financial Corp. CBF and Fidelity Southern Corporation LION . All three stocks hold a Zacks Rank #2 (Buy).

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

FIDELITY SOUTHN (LION): Free Stock Analysis Report

HANCOCK HLDG CO (HBHC): Free Stock Analysis Report

CAPITAL BNK FIN (CBF): Free Stock Analysis Report

To read this article on Zacks.com click here.

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.

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More