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5 Reasons to Add Fifth Third (FITB) Stock to Your Portfolio
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Fifth Third Bancorp (FITB - Free Report) is benefiting from robust revenue growth and solid liquidity. Strategic acquisitions diversified Fifth Third's revenue sources, supporting its top-line growth. Hence, it seems to be a wise idea to add the FITB stock to your portfolio now, given its solid fundamentals and decent growth prospects.
The Zacks Consensus Estimate for FITB's earnings has been revised to 3.3% and 2.3% north for 2023 and 2024, respectively, in the past month. This shows that analysts are optimistic regarding the company’s earnings prospects. It currently carries a Zacks Rank #2 (Buy).
In the past six months, shares of the company have gained 18.5% compared with the industry's growth of 14.6%.
Image Source: Zacks Investment Research
A few factors mentioned below make the stock worth betting on now.
Earnings Growth: FITB witnessed earnings growth of 11.3% in the past three to five years. In the next 3-5 years, the company is expected to witness earnings growth of 2.7%.
Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 7.91%.
The Zacks Consensus Estimate for earnings indicates a 2.8% rise on a year-over-year basis in 2024 and 8.2% in 2025.
Revenue Growth: The company’s diverse revenue base will likely support its financials in the upcoming period. Further, it expanded its fee-income base over the years on strategic buyouts. FITB completed the acquisition of Big Data LLC in 2023, adding national healthcare revenue cycle capabilities to its operations. We expect revenues to drop 1.9% in 2024. It is expected to rebound and grow by 4.5% and 3.1% in 2025 and 2026, respectively.
Strategic Acquisitions: Fifth Third expanded over the years through various strategic acquisitions. The company completed the acquisition of Big Data LLC in 2023, adding national healthcare revenue cycle capabilities to its operations. This will, thereby, advance its digital payments and managed services offerings. It also acquired an embedded payment platform, Rize Money. The acquisitions of Dividend Finance in 2022, Provide in 2021 and Coker Capital in 2018 expanded commercial verticals. The company also made efforts to enhance its presence in the Southeast and reduce its footprint in the Midwest region. With such efforts, Fifth Third diversified its revenue base, which will support the company’s top-line growth even during situations of an economic slowdown.
Strong Liquidity: Reflecting a solid balance sheet position, as of Jun 30, 2024, FITB had a total debt (comprising long-term debt and other short-term borrowings) of $19.7 billion, while total liquidity was $107 billion.
The company’s senior debt enjoyed investment-grade credit ratings of BBB+, A- and Baa1 from Standard & Poor’s, Fitch and Moody’s, respectively. This will likely enable the bank to access the debt market at favorable rates. With a strong liquidity position and manageable debt, we believe it will be able to meet debt obligations in the near term, even if the economic situation worsens.
Effective Capital Distributions: Fifth Third has a decent capital distribution plan supported by a solid capital base and ample liquidity. As of Jun 30, 2024, average loan and lease balances and average total deposits were $117.3 billion and $167.2 billion, respectively. As of Jun 30, 2024, the common equity tier 1 ratio was 10.6%. This offers room for enhanced capital distribution plans.
Following the declaration of 2024 stress test results, the company announced its plans to increase the quarterly cash dividend by 2 cents per share in September 2024, subject to board approval.
Image: Bigstock
5 Reasons to Add Fifth Third (FITB) Stock to Your Portfolio
Fifth Third Bancorp (FITB - Free Report) is benefiting from robust revenue growth and solid liquidity. Strategic acquisitions diversified Fifth Third's revenue sources, supporting its top-line growth. Hence, it seems to be a wise idea to add the FITB stock to your portfolio now, given its solid fundamentals and decent growth prospects.
The Zacks Consensus Estimate for FITB's earnings has been revised to 3.3% and 2.3% north for 2023 and 2024, respectively, in the past month. This shows that analysts are optimistic regarding the company’s earnings prospects. It currently carries a Zacks Rank #2 (Buy).
In the past six months, shares of the company have gained 18.5% compared with the industry's growth of 14.6%.
A few factors mentioned below make the stock worth betting on now.
Earnings Growth: FITB witnessed earnings growth of 11.3% in the past three to five years. In the next 3-5 years, the company is expected to witness earnings growth of 2.7%.
Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 7.91%.
The Zacks Consensus Estimate for earnings indicates a 2.8% rise on a year-over-year basis in 2024 and 8.2% in 2025.
Revenue Growth: The company’s diverse revenue base will likely support its financials in the upcoming period. Further, it expanded its fee-income base over the years on strategic buyouts. FITB completed the acquisition of Big Data LLC in 2023, adding national healthcare revenue cycle capabilities to its operations.
We expect revenues to drop 1.9% in 2024. It is expected to rebound and grow by 4.5% and 3.1% in 2025 and 2026, respectively.
Strategic Acquisitions: Fifth Third expanded over the years through various strategic acquisitions. The company completed the acquisition of Big Data LLC in 2023, adding national healthcare revenue cycle capabilities to its operations. This will, thereby, advance its digital payments and managed services offerings. It also acquired an embedded payment platform, Rize Money. The acquisitions of Dividend Finance in 2022, Provide in 2021 and Coker Capital in 2018 expanded commercial verticals. The company also made efforts to enhance its presence in the Southeast and reduce its footprint in the Midwest region. With such efforts, Fifth Third diversified its revenue base, which will support the company’s top-line growth even during situations of an economic slowdown.
Strong Liquidity: Reflecting a solid balance sheet position, as of Jun 30, 2024, FITB had a total debt (comprising long-term debt and other short-term borrowings) of $19.7 billion, while total liquidity was $107 billion.
The company’s senior debt enjoyed investment-grade credit ratings of BBB+, A- and Baa1 from Standard & Poor’s, Fitch and Moody’s, respectively. This will likely enable the bank to access the debt market at favorable rates. With a strong liquidity position and manageable debt, we believe it will be able to meet debt obligations in the near term, even if the economic situation worsens.
Effective Capital Distributions: Fifth Third has a decent capital distribution plan supported by a solid capital base and ample liquidity. As of Jun 30, 2024, average loan and lease balances and average total deposits were $117.3 billion and $167.2 billion, respectively. As of Jun 30, 2024, the common equity tier 1 ratio was 10.6%. This offers room for enhanced capital distribution plans.
Following the declaration of 2024 stress test results, the company announced its plans to increase the quarterly cash dividend by 2 cents per share in September 2024, subject to board approval.
Other Stocks Worth a Look
Some other top-ranked finance stocks are NatWest Group plc (NWG - Free Report) and BNP Paribas SA (BNPQY - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NatWest Group’s earnings estimates for 2024 have been revised 7.1% upward in the past 30 days. NWG’s shares have gained 49.6% in the past six months.
BNP Paribas’s 2024 earnings estimates have revised by 1% in the past 30 days. BNPQY’s shares have gained 8.2% in the past six months.