Why Cathay General (CATY) Should Be Added To Your Portfolio

In the Q1 earnings season, the Finance sector was one of the best performers. Though uncertainty over further interest rate hikes on mixed U.S. economic data and increasing signals of rising political commotion in the White House is perceived, still we can add some of the banking stocks to our portfolio based on strong fundamentals and solid long-term growth opportunity.

Cathay General Bancorp (NASDAQ:CATY) is one such stock that has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 60 days, the Zacks Consensus Estimate for 2017 and 2018 increased 5.1% and around 2.3%, respectively.

Further, shares of this Zacks Rank #2 (Buy) stock have gained 15.0% over the last one compared with 23.6% growth recorded by the Zacks categorized Banks-West industry.

Notably, Cathay General has a number of other aspects that make it an attractive investment option.

4 Reasons Why Cathay General is an Attractive Buy Now

Revenue Growth: Cathay General continues to make steady progress toward improving its top line. Also, the company’s projected sales growth (F1/F0) of 15.9% (as against the industry average of about 3.96%) indicates constant upward momentum in revenues.

Earnings Strength: Cathay General witnessed earnings growth of 14.2% in the last three–five years. In addition, the company’s long-term (three–five years) estimated EPS growth rate of 8.0% promises rewards for investors over the long run.

Superior Return on Equity (ROE): Cathay General’s ROE of 9.83%, as compared with the industry average of 9.63%, highlights the company’s commendable position over its peers.

Stock is Undervalued: Cathay General has a P/E ratio and P/B ratio of 14.46x and 1.55x compared to the S&P 500 average of 18.95x and 3.23x, respectively. Based on these ratios, the stock seems undervalued.

Other Stocks to Consider

M&T Bank Corporation (NYSE:MTB) has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 1.5%. It carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comerica Incorporated (NYSE:CMA) has been witnessing upward estimate revisions for the last 60 days. Additionally, the stock moved up nearly 48.1% over the past one year. It currently has a Zacks Rank #2.

The PNC Financial Services Group, Inc. (NYSE:PNC) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 2.9% over the last six months. It presently holds a Zacks Rank #2.

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