For Immediate Release
Chicago, IL – December 8, 2022 – Zacks Equity Research shares Wintrust Financial WTFC as the Bull of the Day and Camping World CWH as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Old Second Bancorp OSBC, BCB Bancorp NJ BCBP and S&T Bancorp STBA.
Here is a synopsis of all five stocks.
Bull of the Day:
Wintrust Financial is a Zacks Rank #1 (Strong Buy) is a financial holding company that operates in Community Banking, Specialty Finance, and Wealth Management.
The stock has been trading sideways in a 10-point range as of late. The 200-day moving average has been a magnet, but the momentum in earnings estimates has been trending higher.
As we head into next year, interest rates are likely to stay elevated. This allows banks, more specifically regional banks, to be more profitable.
So can WTFC head higher in 2023? Let us dig into the stock.
About the Company
Wintrust was founded in 1994 and is headquartered in Rosemont, IL.The company operates 173 banking facilities and 228 ATMs in the Chicago metropolitan area, southern Wisconsin, northwest Indiana, and Florida.
Wintrust has a market cap just over $5 Billion and has a Forward PE of 10. The company was founded in 1991, employs over 5,000 and pays a dividend of 1.6%
Q3 Earnings Beat
In October, the company posted a 4.7% beat on earnings and beat on revenues. EPS for Q3 came in at $2.21 v the $2.11 and revenues were $503M v the $499M.
Revenues were up 18% year over year and loan growth increased by 12%.
This was the eight straight beat in the last ten quarters, a streak that has seen the stock almost double since 2020.
The stock has seen earnings estimates drift higher over the last 60 days. For the current quarter, estimates have gone from $2.36 to $2.61 or 10%. For the current year, they have increased from $7.99 to $8.39 or 5%.
While estimates are going higher, analysts are also taking their price targets up. RBC has the stock at an outperform and a $115 target. Wedbush also is at an Outperform and $105 target.
While most stocks are down on the year, Wintrust is about flat. It has been a wild ride in 2022, with the stock trading in a range from $76 to $105, but WTFC always seems to come back to the mid-$80 level. This is basically where the 200-day moving average has been all year.
The key to this stock will of course be continued earnings momentum. But looking at the chart, the bulls need to get back over the $95 level. This would take the stock back to November highs and likely bring some bullish interest.
For those looking for a bargain, they should eye the bottom of the range on any market sell off. This would be in the low $80 area, between $80-82.
Getting exposure to financials with interest rates elevated will be a theme in 2023. Investors should look at regional banks, as positive earnings momentum is likely to move the needle more than larger banks.
While the stock might have gone sideways all year, Wintrust could be a big winner in 2023. Look for momentum to continue and for the stock to get a technical breakout over $95.
Bear of the Day:
Camping World is a Zacks Rank #5 (Strong Sell) that is a provider of services, protection plans, products, and resources for recreational vehicle enthusiasts
The stock has had a rough 2022, down about 40% on the year. On top of market weakness, the stock has reported some earnings misses that have brought pressure in the name.
And now the stock is starting to trend lower as earnings estimates fall. Investors should be cautions as the stock zeros in on 2022 lows.
About the Company
Camping World is headquartered in Lincolnshire, IL. The company was founded in 1966 and employs over 12,000 people.
Camping World operates in two segments, Good Sam Services and Plans; and RV and Outdoor Retail. The company operated through a network of approximately 187 retail locations in 40 states of the United States. It serves customers through dealerships, and online and e-commerce platforms.
CWH is valued at $2 billion and has a Forward PE of 5. The company holds a Zacks Style Scores of “A” in Value, Growth and Momentum. The stock pays a hefty dividend of 10%, but that hasn’t been enough to attract investors.
The company reported EPS in early November, reporting a 16% EPS miss. This was their second earnings miss in just three quarters and the stock is trading about 15% lower since the earnings release.
Q3 came in at $1.07 v the $1.27 expected. Revenues slightly beat expectations, coming in at $1.86B v the $1.82B expected. EBITDA margins came in at 9.3% v the 15% a year ago and was down from 12.8% last quarter.
Same store revenues were down 4.8% year over year.
With the earnings report leaning to the weak side, analyst have lowered estimates. We can see a steady downtrend for all time frames for the last three months.
Over the last 60 days, estimate have been lowered 81% from the current quarter, falling from $0.32 to $0.06.
Looking to beat year, the last 60 days have been taken down as well. Analysts now see $3.35, which is 18% below the previously expected $4.12.
As mentioned above, the stock is looking at a 40% down move in 2022. The stock is about 50% off all-time highs, but over 500% above the COVID lows at $4.
Investors should be concerned that the stock is trading under all moving averages. The 200-day was holding up before EPS, but eventually gave way and the stock has been in free fall since. The bulls will need to get this MA back if they want the momentum to change.
In the meantime, there is momentum to the downside to take out 2022 lows. Those lows are only about 10% below current price, so watch that $20.85 level as that is what the bears are shooting for.
Camping World is a great place to buy or service your recreational vehicle, but the stock should be avoided at the moment. On the fundamental side, earnings momentum is to the downside and estimates are going lower. On the technical side, the stock is drifting to 2022 lows and below all moving averages.
3 Winning Bank Stocks That Still Have Room to Run in 2023
Stubbornly high inflation for the most part of the year did compel the Federal Reserve to apply an aggressive rate-hike policy. In fact, the Fed raised its interest rates by 75 basis points for the fourth consecutive time this year to curb inflationary pressure. Now, the interest rate stands at a range of 3.75% to 4%, the highest in 14 years.
However, signs of inflation moderating in the month of October to a certain extent made market pundits believe that the Fed may slow down the pace of rate hikes in the forthcoming months. According to the Bureau of Labor Statistics, the consumer price index (CPI) advanced 7.7% compared to year-ago levels in October. This was less than September’s annual rise of 8.2%.
In fact, Fed Chairman Jerome Powell also specified that the central bank might lessen the pace of interest rate increases in the December meeting, with many analysts projecting a rate hike of 50 basis points as a replacement for 75 basis points.But, recent robust growth in the service sector coupled with a solid increase in wages fueled expectations that the Fed may continue to remain hawkish, and that pausing interest rate hikes at the moment seems a far-fetched idea.
The Institute of Supply Management’s Services PMI Index climbed to 56.5% in November from 54.4% in October, indicating exceptional growth. Similarly, wages jumped more than 5% last month from a year ago, and that could easily fuel inflation, eventually leading to a more aggressive Fed.
A hawkish Fed, actually, stands to benefit banks.This is because a hike in interest rates boosts a bank’s profit margin by increasing the spread between what banks earn by funding long-term assets such as loans, with short-term liabilities, including deposits.Therefore, it is judicious to invest in shares of banks that have not only gained from a hawkish environment this year but are also expected to capitalize on further rate hikes next year as well.
Meanwhile, consumer loan growth, particularly in the United States, remains stable. To top it, the household wealth of high net-worth individuals is poised to grow significantly in the near future, which should benefit banks’ wealth management division.
Banking on such positives, we have highlighted three bank stocks, namely, Old Second Bancorp, BCB Bancorp NJ and S&T Bancorp, whose shares have gained considerably so far this year, and are further poised to gain traction in the near term. These stocks boast a solid Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Old Second Bancorp’s full-service banking businesses include the customary consumer and commercial products and services that banks provide.
The Zacks Consensus Estimate for its current-year earnings has moved up 4.7% over the past 60 days. OSBC’s expected earnings growth rate for the current year is 15.4%. It’s projected earnings growth rate for the next year is 28.7%.
BCB Bancorp operates as the holding company for BCB Community Bank, a state-chartered commercial bank that provides banking products and services to businesses and individuals in the United States.
The Zacks Consensus Estimate for its current-year earnings has moved up 5.8% over the past 60 days. BCBP’s expected earnings growth rate for the current year is 43.8%. It’s projected earnings growth rate for next year is 3.6%.
S&T Bancorp is a bank holding company engaged in the general banking business.
The Zacks Consensus Estimate for its current-year earnings has moved up 9.1% over the past 60 days. STBA’s expected earnings growth rate for the current year is 19.6%. It’s projected earnings growth rate for the next quarter is 14.7%.
Shares of Old Second Bancorp, BCB Bancorp and S&T Bancorp, by the way, have soared 36.1%, 20.2% and 13.2%, respectively, on a year-to-date basis.
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