Near-Term Prospects Look Gloomy For Savings & Loan Industry
Zacks Investment Research | Feb 27, 2020 08:20PM ET
The Zacks Finance Sector Sector, has underperformed the S&P 500 and its own sector over the past year.
While the stocks in this industry have collectively declined 5.5%, the Zacks S&P 500 Composite and Zacks Finance Sector have rallied 10.3% and 1.4%, respectively.
One-Year Price Performance
Industry’s Valuation
One might get a good sense of the industry’s relative valuation by looking at its price-to-tangible book ratio (P/TBV), which is commonly used for valuing finance companies because of large variations in their earnings results from one quarter to the next.
The industry currently has a trailing 12-month P/TBV of 1.4X, below the median level of 1.46X, over the past five years. This compares with the highest level of 9.89X and lowest level of 1.14X over this period.
However, the industry is trading at a discount when compared with the market at large, as the trailing 12-month P/TBV ratio for the S&P 500 is 16.1X and the median level is 9.13X.
Price-to-Tangible Book Ratio (TTM)
The Zacks Finance sector’s trailing 12-month P/TBV ratio of 3.1X and the median level of 3.46X for the same period are above the Zacks Savings and Loan industry’s respective ratios.
Price-to-Tangible Book Ratio (TTM)
Bottom Line
Though savings and loan stocks will likely keep benefiting from lower rates, a stabilizing housing market and increasing consumer income, intensifying competition from similar companies might deter these positives to some extent. Apart from these, downtrend in business activities on the drastic spreading of COVID-19 might result in lower demand for loans.
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However, keeping the long-term growth prospects in mind, investors can take advantage of the cheap valuation, and bet on a few savings and loan stocks with solid earnings outlooks.
One should particularly consider betting on savings and loan stocks that depict upbeat earnings outlook. We are presenting three stocks with a Zacks Rank #1 (Strong Buy) and one with a Zacks Rank #2 (Buy) that investors may consider betting on.
(You can see )
4 Savings and Loan Stocks to Bet on
Flushing Financial Corporation (FFIC): The stock of this Uniondale, NY-based bank has lost around 4.9%, in the last six months. The Zacks Consensus Estimate for the ongoing-year EPS has been revised 2.9% upward in 30 days’ time. The stock currently sports a Zacks Rank of 1.
Price and Consensus: FFIC
Investors Bancorp, Inc. (ISBC): Shares of this Short Hills, NJ-based bank have depreciated 5.1%, in six months’ time. The consensus EPS estimate for the current year moved up 2.2%, over the last 30 days. The stock flaunts a Zacks Rank #1, at present.
Price and Consensus: ISBC
ServisFirst Bancshares, Inc. (SFBS): The 2020 consensus EPS estimate for this Birmingham, AL-based bank has moved 2.4% north, in the past 30 days. This Zacks Rank #1 stock has rallied 17.6% in the last six months.
Price and Consensus: SFBS
Citizens Community Bancorp, Inc. (CZWI): Shares of this Eau Claire, WI-based bank have appreciated 7.1%, in the last six months. The consensus EPS estimate for this year has been revised slightly upward, over the last 30 days. The stock currently holds a Zacks Rank of 2.
Price and Consensus: CZWI
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