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4 Reasons to Invest in Valley National (VLY) Stock Right Now

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Valley National Bancorp (VLY - Free Report) stock looks like an attractive investment option now. Supported by a solid balance sheet, the company is expected to keep expanding through acquisitions, likely supporting its financials. Its branch consolidation initiatives and solid loan balances are expected to support revenue growth.

Also, analysts seem to be optimistic regarding VLY’s earnings growth prospects. Over the past 30 days, the Zacks Consensus Estimate for the company’s current-year earnings has moved 1% upward. Thus, currently, Valley National carries a Zacks Rank #2 (Buy).

Shares of Valley National have lost 7.4% over the past year against the industry’s rise of 10.9%.

 

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Image Source: Zacks Investment Research

 

Some factors that make the stock an attractive investment option are mentioned below.

Earnings Strength: Over the last three to five years, Valley National recorded earnings growth of 12%. The upward momentum is expected to continue in the near term. In 2022 and 2023, the company’s earnings are projected to grow 1.7% and 17.8%, respectively.

Revenue Growth: Valley National’s organic growth trajectory looks impressive. Driven by a continued rise in loan balances, the company’s revenues witnessed a compound annual growth rate (CAGR) of 11.3% over the last four years (2018-2021). Over the three-year period ended 2021, net loans witnessed a CAGR of 4.9%.

Driven by robust loan growth on the back of an improving economy, along with strategic buyouts, the company’s revenues are expected to keep improving. In 2022, revenues are projected to increase 17.1%, whereas, in 2023, the top line is expected to grow 13.6%.

Inorganic Growth Efforts: Supported by a solid balance sheet position, Valley National remains well-positioned to grow on the back of opportunistic buyouts. Recently, the company closed the acquisition of Bank Leumi Le-Israel B.M.’s U.S. banking arm.

In December 2021, it acquired Westchester Bank, whereas, in October, it acquired the Arizona-based advisory firm, Dudley Ventures, specializing in the investment and management of tax credits. These deals, along with several past acquisitions, are expected to be earnings accretive and help Valley National diversify revenues and footprint.

Valuation Favorable: Valley National stock looks undervalued right now compared with the broader industry. Its current price/book (P/B) and price/cash flow (P/CF) ratios are below the respective industry averages.

VLY has a P/B ratio of 1.09, lower than the industry average of 1.13. Its P/CF ratio of 8.92 compares favorably with the industry average of 9.00.

Other Stocks Worth a Look

A couple of other top-ranked stocks from the finance space are Associated Banc-Corp (ASB - Free Report) and Commerce Bancshares, Inc. (CBSH - Free Report) . Both ASB and CBSH carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Associated Banc-Corp’s current-year earnings has been revised 4.8% upward over the past 60 days.

ASB’s shares have risen 3.2% in the past year.

Commerce Bancshares recorded an upward earnings estimate revision of 1.7% for 2022 over the past 60 days.

Over the past twelve months, the CBSH stock has lost 4.1%.


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Commerce Bancshares, Inc. (CBSH) - free report >>

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Associated Banc-Corp (ASB) - free report >>

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