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5 Reasons You Should Invest in Bank OZK (OZK) Stock Right Now
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Bank OZK (OZK - Free Report) is well-positioned for top-line growth, supported by its business restructuring and branch consolidation initiatives. The company’s solid loan balances will keep aiding revenues. Thus, it seems to be a wise idea to add the stock to your portfolio now.
Analysts also seem bullish on the stock. The Zacks Consensus Estimate for OZK’s current-year earnings has been revised 5.1% upward over the past 30 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, Bank OZK’s shares have lost 19% so far this year compared with a decline of 15.7% for the industry. However, given a favorable Zacks Rank and positive earnings estimate revisions, the company’s price performance will likely improve in the near term.
Image Source: Zacks Investment Research
Factors That Make Bank OZK a Solid Bet Right Now
Earnings Strength: Bank OZK’s earnings have grown at the rate of 4.6% over the last three to five years, driven by solid top-line performance and strategic buyouts. While the company’s earnings are expected to decline 7.6% in 2022, the same is projected to grow at the rate of 6.4% in 2023.
The company also has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
Revenue Growth: Bank OZK has grown substantially through de novo branching strategy and inorganically. Its revenues witnessed a compound annual growth rate of 9.4% over the last six years (2016-2021), mainly driven by steady loan growth and a rise in fee income. The uptrend in revenues continued in the first quarter of 2022. Given its strong balance sheet position, the bank is expected to continue expanding through acquisitions.
For 2022, the company’s revenues are expected to rise 4.3%, whereas, for 2023, it is projected to grow 8.4%.
Impressive Capital Deployments: Bank OZK has been regularly increasing its quarterly dividend. In April 2022, it hiked its dividend for the 47th consecutive quarter. In July 2021, the company announced a share repurchase program to buy back shares worth up to $300 million through Jul 1, 2022. In October, it increased the authorization, which now totals $650 million and will expire on Nov 4, 2022.
Given a robust capital position, the company is expected to sustain efficient capital-deployment activities, thereby, continuing to enhance shareholder value.
Favorable Valuation: Bank OZK stock looks undervalued when compared with the broader industry. Its price/earnings and price/cash flow ratios are below the respective industry averages. OZK has a P/E (F1) ratio of 9.26 compared with the industry average of 9.71. Its P/CF ratio stands at 7.09, below the industry’s 8.35.
Superior Return on Equity (ROE): Bank OZK’s trailing 12-month ROE reflects its superiority in terms of utilizing shareholder funds compared with its peers. The company has an ROE of 12.57%, higher than the industry average of 11.55%.
The consensus estimate for Gladstone Capital’s current fiscal year’s earnings has been revised 8.1% upward over the past 60 days. Over the past year, GLAD’s share price has rallied 9.9%.
Main Street Capital’s current-year earnings estimates have been revised 1.4% upward over the past 60 days. MAIN’s shares have lost 5.5% over the past year.
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5 Reasons You Should Invest in Bank OZK (OZK) Stock Right Now
Bank OZK (OZK - Free Report) is well-positioned for top-line growth, supported by its business restructuring and branch consolidation initiatives. The company’s solid loan balances will keep aiding revenues. Thus, it seems to be a wise idea to add the stock to your portfolio now.
Analysts also seem bullish on the stock. The Zacks Consensus Estimate for OZK’s current-year earnings has been revised 5.1% upward over the past 30 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, Bank OZK’s shares have lost 19% so far this year compared with a decline of 15.7% for the industry. However, given a favorable Zacks Rank and positive earnings estimate revisions, the company’s price performance will likely improve in the near term.
Image Source: Zacks Investment Research
Factors That Make Bank OZK a Solid Bet Right Now
Earnings Strength: Bank OZK’s earnings have grown at the rate of 4.6% over the last three to five years, driven by solid top-line performance and strategic buyouts. While the company’s earnings are expected to decline 7.6% in 2022, the same is projected to grow at the rate of 6.4% in 2023.
The company also has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
Revenue Growth: Bank OZK has grown substantially through de novo branching strategy and inorganically. Its revenues witnessed a compound annual growth rate of 9.4% over the last six years (2016-2021), mainly driven by steady loan growth and a rise in fee income. The uptrend in revenues continued in the first quarter of 2022. Given its strong balance sheet position, the bank is expected to continue expanding through acquisitions.
For 2022, the company’s revenues are expected to rise 4.3%, whereas, for 2023, it is projected to grow 8.4%.
Impressive Capital Deployments: Bank OZK has been regularly increasing its quarterly dividend. In April 2022, it hiked its dividend for the 47th consecutive quarter. In July 2021, the company announced a share repurchase program to buy back shares worth up to $300 million through Jul 1, 2022. In October, it increased the authorization, which now totals $650 million and will expire on Nov 4, 2022.
Given a robust capital position, the company is expected to sustain efficient capital-deployment activities, thereby, continuing to enhance shareholder value.
Favorable Valuation: Bank OZK stock looks undervalued when compared with the broader industry. Its price/earnings and price/cash flow ratios are below the respective industry averages. OZK has a P/E (F1) ratio of 9.26 compared with the industry average of 9.71. Its P/CF ratio stands at 7.09, below the industry’s 8.35.
Superior Return on Equity (ROE): Bank OZK’s trailing 12-month ROE reflects its superiority in terms of utilizing shareholder funds compared with its peers. The company has an ROE of 12.57%, higher than the industry average of 11.55%.
Other Stocks Worth a Look
A couple of other top-ranked stocks from the finance space are Gladstone Capital Corporation (GLAD - Free Report) and Main Street Capital Corporation (MAIN - Free Report) . GLAD currently sports a Zacks Rank #1 (Strong Buy), whereas MAIN carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Gladstone Capital’s current fiscal year’s earnings has been revised 8.1% upward over the past 60 days. Over the past year, GLAD’s share price has rallied 9.9%.
Main Street Capital’s current-year earnings estimates have been revised 1.4% upward over the past 60 days. MAIN’s shares have lost 5.5% over the past year.