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5 Reasons to Invest in East West Bancorp (EWBC) Stock Now
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East West Bancorp, Inc. (EWBC - Free Report) stock looks like a good investment option now. The company remains on track for organic growth, supported by the rise in loans and deposit balances. Also, its efficient capital deployments indicate a solid balance sheet and liquidity position.
Analysts seem to be optimistic regarding the company’s earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 6.1% upward over the past 30 days. Thus, East West Bancorp currently sports a Zacks Rank #1 (Strong Buy).
Looking at its price performance, shares of the company have gained 17.7% over the past six months compared with 5.2% growth recorded by the industry.
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Let’s check some of the other factors that make the stock an attractive pick right now.
Key Fundamentals
Earnings Growth: East West Bancorp witnessed earnings growth of 10.6% in the past three to five years, marginally higher than the industry average of 10.4%. The upward momentum is likely to continue in the near term, as reflected by the company’s projected earnings growth rate of 5.9% for 2022 and 13.7% for 2023.
Further, its long-term (three to five years) estimated earnings growth rate of 10% promises rewards for investors.
Revenue Strength: The company’s organic growth trajectory looks impressive. While net interest income, which is the primary source of its revenues, declined in 2020; the same witnessed a compound annual growth rate (CAGR) of 5.8% over the last five years (2017-2021). Continued growth in loans is expected to further support the top line in the near term. Over the same period, total loans witnessed a CAGR of 9.5%.
EWBC’s 2022 revenues are projected to grow 11.8%, whereas 2023 revenues will likely grow 12.9%.
Efficient Capital Deployments: East West Bancorp’s capital deployment activities seem impressive. In January 2022, the company hiked its quarterly dividend by 21%. This followed a 20% hike in both January 2021 and April 2019, 15% in July 2018, and 11.1% in January 2015.
Also, the company has a share-repurchase plan in place, under which it is authorized to repurchase up to $500 million worth of shares. While EWBC hasn’t repurchased shares since the first quarter of 2020, its capital deployment plan looks sustainable, given a solid capital position and earnings strength.
Superior Return on Equity (ROE): East West Bancorp has an ROE of 15.62%, higher than the industry average of 12.21%. This shows that the company reinvests its cash more efficiently than its peers.
Strong Leverage: The company currently has a debt/equity ratio of 0.07 compared with the industry average of 0.13. This highlights that EWBC is better positioned than its peers. The company will be financially stable even in adverse economic conditions.
The Zacks Consensus Estimate for Morgan Stanley’s current-year earnings has been revised 4.2% upward over the past 60 days. MS’s shares have risen 41.7% in the past year.
Moelis & Company recorded a marginal upward earnings estimate revision for 2022 over the past 60 days. The MC stock has rallied 4.2% in the past year.
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5 Reasons to Invest in East West Bancorp (EWBC) Stock Now
East West Bancorp, Inc. (EWBC - Free Report) stock looks like a good investment option now. The company remains on track for organic growth, supported by the rise in loans and deposit balances. Also, its efficient capital deployments indicate a solid balance sheet and liquidity position.
Analysts seem to be optimistic regarding the company’s earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 6.1% upward over the past 30 days. Thus, East West Bancorp currently sports a Zacks Rank #1 (Strong Buy).
Looking at its price performance, shares of the company have gained 17.7% over the past six months compared with 5.2% growth recorded by the industry.
Let’s check some of the other factors that make the stock an attractive pick right now.
Key Fundamentals
Earnings Growth: East West Bancorp witnessed earnings growth of 10.6% in the past three to five years, marginally higher than the industry average of 10.4%. The upward momentum is likely to continue in the near term, as reflected by the company’s projected earnings growth rate of 5.9% for 2022 and 13.7% for 2023.
Further, its long-term (three to five years) estimated earnings growth rate of 10% promises rewards for investors.
Revenue Strength: The company’s organic growth trajectory looks impressive. While net interest income, which is the primary source of its revenues, declined in 2020; the same witnessed a compound annual growth rate (CAGR) of 5.8% over the last five years (2017-2021). Continued growth in loans is expected to further support the top line in the near term. Over the same period, total loans witnessed a CAGR of 9.5%.
EWBC’s 2022 revenues are projected to grow 11.8%, whereas 2023 revenues will likely grow 12.9%.
Efficient Capital Deployments: East West Bancorp’s capital deployment activities seem impressive. In January 2022, the company hiked its quarterly dividend by 21%. This followed a 20% hike in both January 2021 and April 2019, 15% in July 2018, and 11.1% in January 2015.
Also, the company has a share-repurchase plan in place, under which it is authorized to repurchase up to $500 million worth of shares. While EWBC hasn’t repurchased shares since the first quarter of 2020, its capital deployment plan looks sustainable, given a solid capital position and earnings strength.
Superior Return on Equity (ROE): East West Bancorp has an ROE of 15.62%, higher than the industry average of 12.21%. This shows that the company reinvests its cash more efficiently than its peers.
Strong Leverage: The company currently has a debt/equity ratio of 0.07 compared with the industry average of 0.13. This highlights that EWBC is better positioned than its peers. The company will be financially stable even in adverse economic conditions.
Other Stocks Worth Considering
A couple of other top-ranked stocks from the finance space are Morgan Stanley (MS - Free Report) and Moelis & Company (MC - Free Report) . Both Morgan Stanley and Moelis & Company currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Morgan Stanley’s current-year earnings has been revised 4.2% upward over the past 60 days. MS’s shares have risen 41.7% in the past year.
Moelis & Company recorded a marginal upward earnings estimate revision for 2022 over the past 60 days. The MC stock has rallied 4.2% in the past year.