Shares of Fifth Third Bancorp FITB crafted a new 52-week high, touching $21.90 on Jun 23. The stock of this diversified financial services provider closed the session a notch lower at $21.69, reflecting a year-to-date return of 8.1%. The trading volume for the session was 8.7 million shares.
Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left, given strong estimate revisions over the last 60 days and expected earnings growth of 5%.
Growth Drivers
Strong cost savings initiatives and first-quarter 2015 results were the primary growth drivers.
Recently, Fifth Third revealed its plans to consolidate or sell around 100 branches and around 30 other properties. The potential moves are expected to result in $60 million in cost savings annually. Fifth Third is likely to incur around $75–85 million in non-cash impairment charges that will be recognized in the second-quarter 2015. Further, the company anticipates recognizing around $6–10 million in other costs, mainly tied with real estate contract terminations. The proposed actions are likely to be completed by mid-2016.
Fifth Third came out with earnings of 44 cents per share on Apr 21, beating the Zacks Consensus Estimate by 18.9%. Moreover, the reported figure outpaced the prior-year quarter earnings by 22%.
Results were aided by a 3.4% year-over-year rise in net revenues and 3% fall in non-interest expenses. Further, the quarter witnessed an increase in average loans (up 1%) along with higher deposits (up 4%).
Fifth Third remains focused on improving its credit quality and a reduction in non-performing assets bear testimony to that. Total nonperforming assets, including loans held for sale, were down 27% from the year-ago quarter. The improvement was also reflected in net charge-offs, which declined 45.8% from the prior-year quarter.
Estimate Revisions Show Potency
Analysts’ bullish stance was reflected in the earnings estimates movement over the last 60 days. The Zacks Consensus Estimate for 2015 has gone up around 1% to $1.67 per share, while it remained stable at $1.79 for 2016.
Some-better ranked stocks in the finance space include Comerica Incorporated CMA, Commerce Bancshares, Inc. CBSH and MidWest One Financial Group, Inc. MOFG. All three stocks sport a Zacks Rank #2 (Buy).
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