5 Reasons to Add BOK Financial (BOKF) to Your Portfolio Now
BOK Financial's (BOKF) decent balance sheet growth, strong liquidity profile and steadily improving asset quality make it a wise investment pick.
It seems appropriate to invest in BOK Financial BOKF stock right now. The company’s strong fundamentals and improving asset quality trends make it a promising pick.
Moreover, BOK Financial has been witnessing upward earnings estimate revisions, reflecting analysts’ optimism regarding its earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for BOK Financial's 2021 earnings has been revised 3% upward. Thus, the company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Its price performance also seems decent. The stock has gained 20.5% over the past three months, outperforming the industry’s growth of 14.7%.
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What Makes BOK Financial Attractive?
Impressive Organic Growth: BOK Financial’s loan and deposits’ growth sets the stage for a strong balance sheet. The company witnessed increase in commercial and consumer loans with a compound annual growth rate (CAGR) of 7.9% in the last five years (2016-2020). Moreover, deposits also escalated, recording five-year CAGR of 12.3% in 2020, with some annual volatility with the trend continuing in the first nine months. The company is well-poised for organic growth, as economic growth continues to be solid, driving borrower demand and normalization in line utilization.
Robust Liquidity Profile: BOK Financial had $729.3 million of cash and due from banks, and around $14 billion of secured wholesale borrowing capacity as of the third-quarter end. With improving times interest earned ratio of 6.5 and deposit growth, we believe that the company is well-positioned in terms of its liquidity profile. Investment-grade credit ratings of BBB+, A and A3, with a stable outlook from S&P, Fitch Ratings and Moody’s, respectively, as of May 2021, also renders it favorable access to the debt market. Hence, given its strong liquidity profile, the company might be able to continue meeting debt and interest obligations in the near term even if the economic situation worsens.
Improving Asset Quality Trends: We find the improved asset quality trends at BOK Financial encouraging. Though provisions escalated in 2020 on the coronavirus-led mayhem, the same was reversed to an extent of $83 million in the first nine months of 2021 as the economy showed signs of gradual recovery. Given the volatility in energy loans, the company has been making efforts to diversify its loan portfolio and shifting loan balances from energy loans to healthcare and service lending.Notably, management believes overall loan loss reserve as a percent of loan balances will continue to migrate toward pre-pandemic levels.
Earnings Growth: BOK Financial’s recorded earnings growth of 7.2% over the past three to five years. The momentum is likely to continue in the near term, as reflected by the company’s projected earnings growth rate of 44.9% for 2021.
Moreover, BOK Financial has an impressive earnings surprise history. The company's earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 25.4%.
Strong Leverage: BOK Financial’s debt/equity ratio is 0.03, lower than the industry average of 0.07. The relatively strong financial health of the company is likely to help it perform better than its peers in a dynamic business environment.
Other Key Picks
Some other stocks in the banking space are PCB Bancorp PCB, First Financial Bankshares FFIN and Southside Bancshares SBSI. At present, PCB Bancorp sports a Zacks Rank #1, while First Financial and Southside Bancshares carry a Zacks Rank of 2 (Buy).
Over the past three months, PCB Bancorp stock has gained 18.1%, whereas shares of First Financial and Southside Bancshares have rallied 10.8% and 15.8%, respectively.
Over the past 30 days, the Zacks Consensus Estimate for PCB Bancorp’s current-year earnings has been revised 6.6% upward while that of First Financial has moved north marginally. Current-year earnings estimates for Southside Bancshares have moved up 9.5% over the same time frame.
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BOK Financial Corporation (BOKF): Free Stock Analysis Report
First Financial Bankshares, Inc. (FFIN): Free Stock Analysis Report
Southside Bancshares, Inc. (SBSI): Free Stock Analysis Report
PCB Bancorp (PCB): Free Stock Analysis Report
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