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Is It Wise to Hold On to BOK Financial (BOKF) Stock Now?

BOK Financial Corporation BOKF continues to benefit from solid organic growth and strategic moves. However, mounting expenses and unsustainable capital-deployment activities are major near-term concerns.

BOK Financial’s strategic moves look impressive. The company has continued its expansion into vigilantly-selected markets. Since 2016, it has completed a number of acquisitions, expanding its asset-management business and footprint.

Moreover, the company’s growth in loans has been decent over the past few years. It has been able to post continued loan growth on increase in commercial and consumer loans with a Compound Annual Growth Rate (CAGR) of 8.2% in the last five years (2015-2019). Notably, the increasing trend continued in the first six months of 2020.

Though the net interest margin remains under pressure due to the low-rate environment, decent lending and low deposit costs can be supporting factors. Further, the Zacks Consensus Estimate for earnings has been revised 3.8% and 9.4% upward for 2020 and 2021, respectively, over the past month.

However, the company’s escalating operating expenses is a cause of concern. The same witnessed a CAGR of 7.1% over the last five years (2015-2019), due to a rise in almost all the components, though it declined in the first six months of 2020. Any further escalation in costs could cause operational inefficiency and might hinder bottom-line expansion in the near term.

Though BOK Financial has been announcing dividend hikes every year, its debt/equity ratio seems unfavorable compared with the broader industry. Furthermore, the company’s performance in the past few quarters has been quite fluctuating. Hence, we believe that the bank’s capital-deployment activities might not be sustainable.

Also, shares of this Zacks Rank #3 (Hold) company have lost 32.7%, so far this year, compared with the 24.1% decline recorded by the industry.

Stocks to Consider

Red River Bancshares, Inc.’s RRBI Zacks Consensus Estimate for the current-year earnings moved 5.7% north to $3.32 over the past month. The stock currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Guaranty Bancshares Inc.’s GNTY Zacks Consensus Estimate for 2020 earnings moved 9.5% upward to $2.08 over the past month. The stock currently holds a Zacks Rank of 2 (Buy).

ETRADE Financial Corporation’s ETFC Zacks Consensus Estimate for earnings moved 8.2% north to $3.05 in a month’s time for 2020. The stock currently carries a Zacks Rank of 2.

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