Shares of Hudson City Bancorp, Inc. (HCBK) spiked to a new 52-week high, touching $9.20 in the first half of the trading session on Jun 27. The closing price of this stock was $9.16, reflecting a solid year-to-date return of 11.3%. The trading volume for the session was 2.3 million shares.
Although earnings for 2013 and 2014 are expected to substantially decrease, there remains scope for revival based on this Zacks Rank #3 (Hold) stock’s estimated long-term earnings growth of 4.0%.
Growth Drivers
The merger agreement between Hudson City and M&T Bank Corporation (MTB), which was put on hold, has recently cleared all regulatory hurdles. The merger agreement with M&T bank is worth $3.7 billion (in cash and stock). The approval from the Federal Reserve has boosted the stock price to the current levels.
Hudson City’s first-quarter 2013 earnings reflect the company’s consistent efforts to strengthen its balance sheet. In the present low interest rate environment, Hudson City adopted risk-averse strategies in order to maintain the stability of its balance sheet. This in turn lowered earnings to 10 cents per share from 15 cents in the prior-year quarter.
Though volatile economic environment was a headwind, latest recovery trends along with the stabilizing housing market is expected to positively impact Hudson City’s loan portfolio and stimulate its long-term growth.
Estimate Revisions
In the last 60 days, the Zacks Consensus Estimate for 2013 fell 4.7% to 41 cents. Further, for 2014, the Zacks Consensus Estimate decreased 9.8% to 37 cents per share over the same time frame.
Better performing stocks in the same sector include First Pactrust Bancorp, Inc. (BANC) and Mutualfirst Financial Inc. (MFSF) – both of which carry a Zacks Rank #1 (Strong Buy).
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