5 Reasons Why Bank Of The Ozarks Is An Attractive Choice

Since the U.S. Presidential election results, banking stocks are on a rally. Growing optimism over an improving rate scenario and strengthening of the domestic economy added fuel to fire.

If you are thinking of entering the market, this is the right time. Banks are one of the winners of the current stock market rally. From the vast universe of the banking stocks, today we have chosen – Bank of the Ozarks, Inc. (NASDAQ:OZRK) – for you to consider.

The stock has increased 49.4% since the election results, outperforming 31.2% gain for the Zacks categorized Southeast Banks industry. Despite this impressive price performance, this Zacks Rank #2 (Buy) stock has plenty of upside left based on its growth prospects and earnings strength.



Let’s check out the key factors that support the stock’s growth prospects:

Revenue Strength: Bank of the Ozarks’ revenues have risen at a compounded annual growth rate (“CAGR”) of 31.2% over the last five years (2012–2016). The strong top-line improvement is backed by its de novo branching strategy as well as inorganic growth.

Further, the company’s projected sales growth (F1/F0) of 35.9% (compared with the industry average of 3.3%) ensures continuation of the upward trend in revenues.

Earnings Per Share Growth: Over the past three to five years, Bank of the Ozarks witnessed earnings per share (EPS) growth of 22.1% compared with 10.9% for the Industry. Notably, the company has a strong earnings surprise history, having delivered positive surprises in all the trailing four quarters with an average beat of 6.31%.

Further, the company’s earnings are projected to grow 19.4% in 2017, significantly higher than 9.8% predicted for the industry. Also, the company’s long-term (three to five years) estimated EPS growth rate of 12.0% promises rewards for investors in the long run.

Solid Dividend Yield: Bank of the Ozarks’ capital-deployment activities remain impressive. The company has been steadily increasing its quarterly dividend. Its current dividend yield of 1.49% is higher than the industry average of 0.77%.

Strong Leverage: Bank of the Ozarks’ debt/equity ratio stands at 0.06 compared with the industry average of 0.33, indicating relative lower debt burden. It indicates the company’s financial stability even amid an unstable economic environment.

Growing Cash Flow: Bank of the Ozarks has seen historical cash flow growth of 78.7% compared with 16.6% for the industry. The current cash flow growth looks much impressive when compared with the industry. The company’s current cash flow growth rate is 51.3% versus the industry’s 9.9%.

Other Stocks Worth a Look

Some other stocks worth considering in the same industry include Capital Bank Financial, FCB Financial and Synovus Financial. All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Capital Bank Financial Corp. (NASDAQ:CBF) witnessed an upward earnings estimate revision of 2.7% for 2017, over the past 60 days. Also, its share price has increased 15.9% over the last three months.

FCB Financial Holdings, Inc. (NYSE:FCB) also recorded an upward earnings estimate revision of 4.3% for 2017, over the same time frame. Its share price is up 14.2% over the last three months.

Synovus Financial Corp. (NYSE:SNV) earnings estimates have been revised upward by nearly 3.7%, over the past two months. Its share price rallied 10.9% in the last three months.

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