This Financial Stock Is Hitting All-Time Highs

Even as interest rates have surged this year, most financial stocks have had a rough go as many banks and financial institutions have sounded the alarm on the dire economic outlook. JPMorgan Chase CEO Jamie Dimon is even predicting an economic “hurricane” caused by rising inflation, interest rate hikes from the Fed, and the war in Ukraine.

The Fed is beginning to unwind its balance sheet, a process known as quantitative tightening, at the same time it is embarking upon the rate hike journey. Dimon stated that the market is not prepared for this, and it’s something that people will be “writing about in history books for 50 years.” The tone marked a swift departure from Dimon’s sentiment at an analyst meeting during the end of last month, where the bank CEO sounded a bit more upbeat on the economic outlook.

While financial stocks haven’t necessarily been the year’s best performers, they’ve held up relatively well. The Zacks Finance sector is ranked in the top 38% out of all 15 sectors, and has outperformed the S&P 500 year-to-date. In addition, the sector is relatively undervalued as we can see below:

Image Source: Zacks Investment Research

Within this sector, the Zacks Banks – Southwest industry group is currently ranked in the top 19% out of more than 250 industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months. The industry group has performed admirably this year (+0.17%), a big win relative to the S&P’s -13.6% return. Like the sector, this industry is also undervalued:

Zacks Investment Research
Image Source: Zacks Investment Research

Quantitative research studies have shown that approximately half of a stock’s price appreciation can be attributed to its industry group. By focusing on stocks within the top industries, we can dramatically improve our odds of success. Let’s take a look at a leading stock contained within this top industry and sector combination.

BancFirst Corp. †BANF

BancFirst Corporation is a bank holding company that provides a wide range of commercial banking services to small and medium-sized businesses as well as retail customers. BANF offers checking and savings accounts, sweep accounts, IRAs, and CDs. The company also provides lending services to a host of different industries such as real estate, energy, and insurance. BANF operates through 108 banking locations in Oklahoma and 3 locations in Texas. BancFirst Corporation was incorporated in 1984 and is headquartered in Oklahoma City, OK.

BANF has surpassed earnings estimates in three of the past four quarters. The holding company most recently reported Q1 EPS back in April of $1.08, a 16.13% surprise over the $0.93 consensus estimate. BANF has delivered a trailing four-quarter average earnings surprise of 12.98%, aiding the stock’s 42% return in the past year.

BancFirst Corporation Price, Consensus and EPS Surprise

BancFirst Corporation Price, Consensus and EPS Surprise

Analysts are in agreement in terms of earnings estimates and have raised them across the board. The one quarter that really sticks out this year is Q3, where EPS estimates have surged 22.22% in the past 60 days. The Zacks Consensus Estimate is now $1.21, reflecting growth of 4.31% relative to the same quarter last year.

If you’ve been looking for a financial stock that is outperforming the market, look no further.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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