Should You Add Huntington (HBAN) Stock In Your Portfolio?
Zacks Investment Research | Dec 05, 2016 10:10PM ET
On Dec 5, 2016, we issued an updated research report on Huntington Bancshares Inc. (NASDAQ:HBAN) . We believe this Midwest bank’s expansion story has been aided by a number of factors, including the company’s consistent focus on sustaining organic growth, efforts to expand its market share, solid capital position, along with steady capital deployment activities.
Driven by a strong liquidity position, Huntington has been able to expand via a couple of mergers and acquisitions over the past couple of years, the latest being the acquisition of Ohio-based FirstMerit Corporation. Prior to that, in Apr 2015, the company completed the acquisition of Australia-based Macquarie Equipment Finance, Inc. Huntington also announced the opening of additional 43 in-store Meijer branches in Michigan last year. In 2014, the company bought Camco Financial and 24 branches in Michigan from the Bank of America Corp. (NYSE:BAC) .
We also remain encouraged by the company’s steady capital deployment measures. Following the Federal Reserve’s approval of its 2016 Capital Plan, the company’s board of directors hiked its quarterly dividend by 14% in Oct 2016. Moreover, the 2016 capital plan also includes the issuance of capital related to the FirstMerit Corporation acquisition and continues the previously announced suspension of the company's share repurchase program.
Excluding significant items, Huntington anticipates 16–18% revenue growth and positive operating leverage in 2016. Core net interest margin (NIM) is expected to remain above 3% in the fourth quarter. Management targets to achieve long-term efficiency ratio goal of 56–59%. Further, management anticipates annualized cost savings of $255 million related to the acquisition of FirstMerit Corporation. These cost savings are being recognized and expected to be fully implemented within a year.
Moreover, investors’ optimism was visible over the stock as shares rose over 17% year to date. For 2016 and 2017, the Zacks Consensus Estimate also increased 1.2% and 2.2% to 87 cents and 94 cents, over the last 30 days, respectively. Hence, Huntington currently carries a Zacks Rank #2 (Buy). You can see .
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