Fifth Third Bancorp (FITB) increased its quarterly common stock dividend by about 8% to 14 cents per share. The dividend will be paid on Jan 17, 2017 to shareholders of record as of Dec 30, 2016.
Fifth Third’s robust business model reflects the company’s commitment toward returning value to shareholders, with its strong cash generation capabilities. Prior to this revision, the company had raised its quarterly dividend to 13 cents per share in Jun 2014, an increase of 8%.
In Apr 2016, Fifth Third submitted a capital plan to the Federal Reserve Board, seeking approval for dividend hike and common stock repurchases. The action followed the Fed’s approval of dividend hike and stock buyback, after the completion of stress tests to assess the bank’s financial position.
Considering last day’s closing price of $27.79 per share, the dividend yield is currently valued at 2.02%. Additionally, the company has a share repurchase program in place. Notably, Fifth Third received approval of share buyback up to $660 million.
Investors interested in this Zacks Rank #3 (Hold) stock can have a look at this banking giant’s fundamentals and growth prospects.
Earnings Per Share Strength: Fifth Third’s earnings are expected to show an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 15.8% compared to the industry average rate of 4.0%. Also, the company recorded an average positive earnings surprise of 18.9%, over the trailing four quarters.
Stock is Undervalued: Fifth Third has a P/E ratio of 14.43x, compared to the industry average of 15.79x. Further, the company has a P/B ratio of 1.31x, compared to the industry average of 1.41x. Based on these ratios, the stock seems undervalued.
Leverage: Fifth Third’s debt/equity ratio is 1.09 compared with the industry average of 0.90, indicating higher debt level relative to the industry.
Superior Return on Equity (ROE): Fifth Third’s ROE of 8.8%, as compared with the industry average of 8.7%, highlights the company’s commendable position over its peers.
Share Price Movement: Fifth Third’s shares have gained 38.3% year to date, compared with a 19.5% growth in the Zacks categorized Banks-Major Regional industry.
Here are other bank stocks to consider beyond FITB:
Comerica Incorporated (CMA) has been witnessing upward estimate revisions for the last 60 days. Further, the stock has surged over 65.9% so far, this year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KeyCorp (KEY) has been witnessing upward estimate revisions for the last 60 days. In addition, the company’s shares have risen nearly 42.4% so far, this year. It currently sports a Zacks Rank #1.
The Bank of New York Mellon Corp (BK) has been witnessing upward estimate revisions for the last 60 days. So far this year, the company’s share price has been up more than 19.3%. It carries a Zacks Rank #2 (Buy).
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