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4 Reasons Why You Should Invest in Huntington Stock Right Now
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Huntington Bancshares Incorporated (HBAN - Free Report) is well-positioned to benefit from rising loan and deposit balances. Further, the Federal Reserve’s rate cuts are expected to support the bank’s net interest income (NII) and net interest margin (NIM) expansion over time. A solid liquidity position is another positive.
The Zacks Consensus Estimate for HBAN’s 2024 and 2025 has been revised upward over the past 60 days. The positive estimate revision indicates that analysts are optimistic regarding the company’s prospects and earnings potential.
Estimate Revision Trend
Image Source: Zacks Investment Research
What Makes HBAN Stock Worth Betting On
Fed’s Rate Cuts to Aid NII: Since September 2024, the Fed has cut interest rates by 100 basis points. At present, the fed fund rate stands at 4.25-4.5%. For 2025, the Fed indicates two rate cuts. These reductions will likely support HBAN’s NII and NIM in the upcoming period.
The company’s NII witnessed a four-year compound annual growth rate (CAGR) of 14.1% (2019-2023). Also, NIM improved to 3.25% in 2022 from 2.84% in 2021. However, the metric declined in 2023. Both NII and NIM declined in the first nine of 2024 because of high funding costs.
As the Fed reduces interest rates, funding costs are expected to stabilize, leading to an increased demand for loans. This will contribute to the expansion of NII and NIM over time, thus increasing HBAN’s profitability.
Revenue Strength: HBAN has shown remarkable revenue growth by achieving a CAGR of 15.2% over the past three years (2020-2023). Although the metric declined in the first nine months of 2024, the outlook remains positive, driven by higher NII resulting from the Fed rate cuts and increase in fee income, which are expected to support revenue growth moving forward.
Solid Organic Growth: Huntington is one of the top 20 bank holding companies in the United States and remains focused on acquiring the industry's best deposit franchise. The company’s total deposits saw a four-year (ended 2023) compound annual growth rate (CAGR) of 16.4%. Moreover, driven by the strong performance of the commercial and consumer portfolios, the total loan balance witnessed a CAGR of 12.8% in the same time frame. The uptrend continued for both metrics in the first nine months of 2024.
Moving forward, growing loans and deposit balances are likely to keep supporting the company’s top line.
Expansion Into Key Growth Markets: The bank is actively trying to expand its commercial banking capabilities and enhance its footprint in key growth markets. The company is focused on enhancing its footprint and operations in high-potential regions, with notable expansion efforts underway in the Carolinas and Texas. The company has established five units and 120 relationships in Carolinas, with an emphasis on verticals like the middle market, Small Business Administration and healthcare lending. HBAN plans to add more than 350 employees across varied business divisions and launch roughly 55 retail branches within the next five years. This aligns with the bank’s strategic growth plans to capture an estimated $8 billion long-term deposit market.
In March 2024, HBAN announced its plans to expand its commercial banking business in Texas to take advantage of one of the biggest and fastest-growing markets in the United States.
These strategic efforts will boost its commercial banking capabilities, broaden its market presence and attract new customer segments.
Strong Balance Sheet Position: As of Sept. 30, 2024, Huntington's liquidity, comprising cash and due from banks and interest-bearing deposits, aggregated $12.8 billion. It had a short-term borrowing of $868 million during the same period. Hence, given the solid liquidity, the company is better positioned to meet its debt obligations going forward.
HBAN’s Price Performance & Zacks Rank
Shares of Huntington have gained 14.8% in the past three months compared with the industry’s 12.7% growth.
Earnings estimates for MOFG for the current year have remained unchanged over the past seven days. The company’s shares have gained 32.9% in the past six months.
Estimates for ONB’s current-year earnings have remained unchanged over the past seven days. The company’s shares have risen 27.7% in the past six months.
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4 Reasons Why You Should Invest in Huntington Stock Right Now
Huntington Bancshares Incorporated (HBAN - Free Report) is well-positioned to benefit from rising loan and deposit balances. Further, the Federal Reserve’s rate cuts are expected to support the bank’s net interest income (NII) and net interest margin (NIM) expansion over time. A solid liquidity position is another positive.
The Zacks Consensus Estimate for HBAN’s 2024 and 2025 has been revised upward over the past 60 days. The positive estimate revision indicates that analysts are optimistic regarding the company’s prospects and earnings potential.
Estimate Revision Trend
Image Source: Zacks Investment Research
What Makes HBAN Stock Worth Betting On
Fed’s Rate Cuts to Aid NII: Since September 2024, the Fed has cut interest rates by 100 basis points. At present, the fed fund rate stands at 4.25-4.5%. For 2025, the Fed indicates two rate cuts. These reductions will likely support HBAN’s NII and NIM in the upcoming period.
The company’s NII witnessed a four-year compound annual growth rate (CAGR) of 14.1% (2019-2023). Also, NIM improved to 3.25% in 2022 from 2.84% in 2021. However, the metric declined in 2023. Both NII and NIM declined in the first nine of 2024 because of high funding costs.
As the Fed reduces interest rates, funding costs are expected to stabilize, leading to an increased demand for loans. This will contribute to the expansion of NII and NIM over time, thus increasing HBAN’s profitability.
Revenue Strength: HBAN has shown remarkable revenue growth by achieving a CAGR of 15.2% over the past three years (2020-2023). Although the metric declined in the first nine months of 2024, the outlook remains positive, driven by higher NII resulting from the Fed rate cuts and increase in fee income, which are expected to support revenue growth moving forward.
Solid Organic Growth: Huntington is one of the top 20 bank holding companies in the United States and remains focused on acquiring the industry's best deposit franchise. The company’s total deposits saw a four-year (ended 2023) compound annual growth rate (CAGR) of 16.4%. Moreover, driven by the strong performance of the commercial and consumer portfolios, the total loan balance witnessed a CAGR of 12.8% in the same time frame. The uptrend continued for both metrics in the first nine months of 2024.
Moving forward, growing loans and deposit balances are likely to keep supporting the company’s top line.
Expansion Into Key Growth Markets: The bank is actively trying to expand its commercial banking capabilities and enhance its footprint in key growth markets. The company is focused on enhancing its footprint and operations in high-potential regions, with notable expansion efforts underway in the Carolinas and Texas. The company has established five units and 120 relationships in Carolinas, with an emphasis on verticals like the middle market, Small Business Administration and healthcare lending. HBAN plans to add more than 350 employees across varied business divisions and launch roughly 55 retail branches within the next five years. This aligns with the bank’s strategic growth plans to capture an estimated $8 billion long-term deposit market.
In March 2024, HBAN announced its plans to expand its commercial banking business in Texas to take advantage of one of the biggest and fastest-growing markets in the United States.
These strategic efforts will boost its commercial banking capabilities, broaden its market presence and attract new customer segments.
Strong Balance Sheet Position: As of Sept. 30, 2024, Huntington's liquidity, comprising cash and due from banks and interest-bearing deposits, aggregated $12.8 billion. It had a short-term borrowing of $868 million during the same period. Hence, given the solid liquidity, the company is better positioned to meet its debt obligations going forward.
HBAN’s Price Performance & Zacks Rank
Shares of Huntington have gained 14.8% in the past three months compared with the industry’s 12.7% growth.
Image Source: Zacks Investment Research
HBAN currently carries a Zacks Rank #2 (Buy).
Other Finance Stocks Worth a Look
Some other top-ranked stocks from the banking space are MidWestOne Financial Group, Inc. (MOFG - Free Report) and Old National Bancorp (ONB - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for MOFG for the current year have remained unchanged over the past seven days. The company’s shares have gained 32.9% in the past six months.
Estimates for ONB’s current-year earnings have remained unchanged over the past seven days. The company’s shares have risen 27.7% in the past six months.