We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Bank OZK (OZK) Stock Worth Betting on Post Dividend Hike?
Read MoreHide Full Article
Like always, Bank OZK (OZK - Free Report) has announced an increase in its regular quarterly cash dividend. The company announced a dividend of 22 cents per share, representing 4.8% rise from the prior payout. The dividend will be paid on Jan 22 to shareholders on record as of Jan 15.
This marks 34 consecutive quarters of dividend hike by the company. Based on this increased dividend, Bank OZK’s dividend yield stands at 3.8% considering last day’s closing price of $23.20. Not only the yield is attractive for income investors, it also represents a steady stream of income.
While the stock looks attractive based on regular rise in dividend income, one must take a look at Bank OZK’s fundamentals and financial performance before taking any investment decision.
Bank OZK has grown substantially through de novo branching strategy and inorganically. Over the last six years (2012–2017), the company’s revenues witnessed a CAGR of 31.7%. Given its strong balance sheet position, the bank is expected to continue expanding through acquisitions. It also plans to open additional branches in new and existing markets.
Further, over the last three-five years, the company witnessed earnings per share growth of 24.8%. Also, it is expected to deliver strong earnings performance as indicated by its projected earnings growth of 7.4% and 6.1% for 2018 and 2019, respectively.
Bank OZK displays strong financial leverage. Its debt/equity ratio of 0.09 compares favorably with the industry average of 0.40, indicating a lower debt burden relative to the industry.
Further, Bank OZK looks undervalued based on price-to-earnings (P/E) and price-to-book (P/B) ratios. The company currently has a P/E ratio of 7.18 and P/B ratio of 0.80, which are below the industry average of 11.48 and 1.19, respectively. Also, the stock has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.
Also, Bank OZK’s trailing 12-month return on equity (ROE) reflects its superiority in terms of utilizing shareholders’ fund. The company’s ROE of 11.17% compares favorably with 9.97% for the industry.
Based on the above-mentioned factors, the stock seems worth investing in, but one must look in to the following downsides before taking the final decision.
Bank OZK’s net interest margin continues to remain under pressure despite rise in interest rates. Reduction of the high yielding purchased loans portfolio is one of the main reasons for margin pressure. Further, it is making adjustments in investment securities portfolios leading to lower yields. Thus, the trend will likely persist in the near term.
Also, mounting non-interest expenses pose a concern for the company. Over the last six years (2012–2017), expenses witnessed a CAGR of 23.8%. As the company continues to expand inorganically and open branches in newer areas, overall expenses are expected to remain elevated.
Moreover, Bank OZK’s price performance is quite disappointing. Its shares plunged 52.9% in 2018 compared with the decline of 20.4% for the industry it belongs to.
Our Take
Just because Bank OZK has announced a dividend hike, it will not be wise to bet on the stock right away. Pressure on margins and rising expenses make us apprehensive about its prospects.
Also, its Zacks Consensus Estimate for 2018 earnings has remained unchanged in the past 30 days. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
The Zacks Consensus Estimate for Victory Capital Holdings, Inc. (VCTR - Free Report) earnings for 2018 has moved 1.8% upward over the past 60 days. Also, it has a Value Score of A. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
IBERIABANK Corporation currently carries a Zacks Rank of 2. The stock’s 2018 earnings estimates have moved upward marginally over the past 60 days. Further, the company has a Value Score of B.
The Zacks Consensus Estimate for SunTrust Banks, Inc.’s (STI) earnings for 2018 has moved nearly 1% upward over the past 60 days. Moreover, it has a Value Score of A. Also, it carries a Zacks Rank of 2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Is Bank OZK (OZK) Stock Worth Betting on Post Dividend Hike?
Like always, Bank OZK (OZK - Free Report) has announced an increase in its regular quarterly cash dividend. The company announced a dividend of 22 cents per share, representing 4.8% rise from the prior payout. The dividend will be paid on Jan 22 to shareholders on record as of Jan 15.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/ozk_20190103.jpg)
This marks 34 consecutive quarters of dividend hike by the company. Based on this increased dividend, Bank OZK’s dividend yield stands at 3.8% considering last day’s closing price of $23.20. Not only the yield is attractive for income investors, it also represents a steady stream of income.
While the stock looks attractive based on regular rise in dividend income, one must take a look at Bank OZK’s fundamentals and financial performance before taking any investment decision.
Bank OZK has grown substantially through de novo branching strategy and inorganically. Over the last six years (2012–2017), the company’s revenues witnessed a CAGR of 31.7%. Given its strong balance sheet position, the bank is expected to continue expanding through acquisitions. It also plans to open additional branches in new and existing markets.
Further, over the last three-five years, the company witnessed earnings per share growth of 24.8%. Also, it is expected to deliver strong earnings performance as indicated by its projected earnings growth of 7.4% and 6.1% for 2018 and 2019, respectively.
Bank OZK displays strong financial leverage. Its debt/equity ratio of 0.09 compares favorably with the industry average of 0.40, indicating a lower debt burden relative to the industry.
Further, Bank OZK looks undervalued based on price-to-earnings (P/E) and price-to-book (P/B) ratios. The company currently has a P/E ratio of 7.18 and P/B ratio of 0.80, which are below the industry average of 11.48 and 1.19, respectively. Also, the stock has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.
Also, Bank OZK’s trailing 12-month return on equity (ROE) reflects its superiority in terms of utilizing shareholders’ fund. The company’s ROE of 11.17% compares favorably with 9.97% for the industry.
Based on the above-mentioned factors, the stock seems worth investing in, but one must look in to the following downsides before taking the final decision.
Bank OZK’s net interest margin continues to remain under pressure despite rise in interest rates. Reduction of the high yielding purchased loans portfolio is one of the main reasons for margin pressure. Further, it is making adjustments in investment securities portfolios leading to lower yields. Thus, the trend will likely persist in the near term.
Also, mounting non-interest expenses pose a concern for the company. Over the last six years (2012–2017), expenses witnessed a CAGR of 23.8%. As the company continues to expand inorganically and open branches in newer areas, overall expenses are expected to remain elevated.
Moreover, Bank OZK’s price performance is quite disappointing. Its shares plunged 52.9% in 2018 compared with the decline of 20.4% for the industry it belongs to.
Our Take
Just because Bank OZK has announced a dividend hike, it will not be wise to bet on the stock right away. Pressure on margins and rising expenses make us apprehensive about its prospects.
Also, its Zacks Consensus Estimate for 2018 earnings has remained unchanged in the past 30 days. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
The Zacks Consensus Estimate for Victory Capital Holdings, Inc. (VCTR - Free Report) earnings for 2018 has moved 1.8% upward over the past 60 days. Also, it has a Value Score of A. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
IBERIABANK Corporation currently carries a Zacks Rank of 2. The stock’s 2018 earnings estimates have moved upward marginally over the past 60 days. Further, the company has a Value Score of B.
The Zacks Consensus Estimate for SunTrust Banks, Inc.’s (STI) earnings for 2018 has moved nearly 1% upward over the past 60 days. Moreover, it has a Value Score of A. Also, it carries a Zacks Rank of 2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>