Huntington (HBAN) on the verge of growth: should you hold out?

ohn March 3, we published an updated research report on Huntington Bancshares Incorporated HBAN. The company continues to benefit from organic and inorganic growth strategies, increasing loan and deposit balances, while squeezing margins due to a low interest rate environment and lack of diversification of the loan portfolio remains a concern. short term obstacle.

Zacks’ consensus estimate for the company’s current year earnings has been revised up 7.8% in the past 30 days. The action is currently Zacks Rank # 3 (Hold).

Huntington shares have jumped 60.4% in the past six months, topping the 46.3% growth for the industry.

The company has experienced continuous organic growth over the past few years. In addition, it focuses on achieving the best deposit franchise, with the deposit balance increasing at a compound annual growth rate (CAGR) of 8% over the three-year period ending in 2020. Additionally, loans have improved thanks to its commendable performance in the commercial sector. and the consumer portfolio at a three-year CAGR of 4.4% in 2020. We believe loan and deposit balances are poised to improve in an improving economy.

Driven by a strong liquidity position, Huntington has been able to grow through a few mergers and acquisitions over the past two years, the latest being the agreement announced in December 2020 to acquire TCF Financial to form one of the top 10 regional banks. of the nation. We are anticipating these initiatives to support its performance and help gain market share in the days to come.

However, the growth of the company’s net income remains affected, thanks to the pressure on margins due to the prevailing low interest rate environment. In addition, a growing spending base due to investments in digital, data and technology improvements, product differentiation and other initiatives could disrupt its profitability.

In addition, a large portion of Huntington’s loan portfolio – nearly 52% as of December 31, 2020 – includes total commercial loans. Such a lack of diversification can be precarious for the company in a difficult economic context.

Actions to consider

Top ranked stocks in the financial space include Bancorp partner ASB and UMB Financial Company UMBF, sporting a rank 1 of Zacks (strong buy), and Civista Bancshares, Inc. CIVB wearing a Zacks Rank # 2 (Buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

Associated Bancorp’s profit estimate for 2021 has been revised up 6.8% in the past seven days. In addition, its shares have appreciated 48.7% in the past six months.

UMB has seen an 18.2% upward revision to current year profit estimates over the past 30 days. In addition, its shares have gained 60.4% in the past six months.

Civista Bancshares’ profit estimate has moved 0.6% north for the current year over the past 30 days. In addition, its share price has climbed 53% in six months.

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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.