4 Reasons To Bet On Webster Financial (WBS) Stock Right Now

With the economic and industry factors turning in favor of finance stocks, we have selected Webster Financial Corporation (NYSE:WBS) for your consideration.

This Zacks Rank #2 (Buy) bank displays earnings growth potential on the back of continued growth in loans and deposits, which will further aid profitability. Also, top-line strength and ample liquidity keep us encouraged.

Shares of Webster Financial have gained 5.5% year to date, outperforming the industry’s negative growth of 0.9%.

Further, the stock has seen the Zacks Consensus Estimate for current-year earnings being revised upward by one cent per share over the last 60 days.

What Makes the Stock Attractive

Earnings Growth: While Webster Financial’s historical earnings per share (EPS) growth rate of 5.2% compares unfavorably with the industry average of 8.5%, investors should really focus on the projected EPS growth (F1/F0). Here, the company is looking to grow at a rate of 20.3%, substantially higher than the industry average of 10.9%. Further, the long-term (three-five years) expected EPS growth of 10.4% promises rewards for the shareholders.

Moreover, the company delivered an average positive earnings surprise of 7.3% in the trailing four quarters.

Revenue Growth: Webster Financial has an impressive revenue-growth story. Net interest income has witnessed a compound annual growth rate (CAGR) of 5.5%, over the last five years (2012-2016). The company’s revenues should keep strengthening with rising interest rates. Also, the top line is expected to increase 9.5% in 2017 compared with nil growth for the industry.

Superior Return on Equity (ROE): The company’s ROE of 9.9% compares favorably with the industry’s ROE of 8.6%, reflecting its efficiency in utilizing shareholders’ funds.

Healthy balance sheet: Webster Financial has a healthy balance sheet position. Deposits recorded a five-year (2012-2016) CAGR of 7.4%, aided by rising non-interest-bearing deposits. In addition, the company witnessed impressive loan growth in the same time span, recording a CAGR of 9.2%. Also, it remains focused on achieving 10% annual loan growth in 2017.

Other Stocks to Consider

Some other top-ranked stocks from the same space are ConnectOne Bancorp (NASDAQ:CNOB) , First Commonwealth Financial Corporation (NYSE:FCF) and S&T Bancorp (NASDAQ:STBA) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConnectOne Bancorp has seen the Zacks Consensus Estimate for current-year earnings being revised upward by 13.6% in the last 60 days. The company’s share price has risen almost 3.5%, so far this year.

First Commonwealth’s current-year earnings estimates have been revised 2.5% upward over the last 60 days. Also, its shares have climbed 4.8% year to date.

The Zacks Consensus Estimate for S&T Bancorp’s current-year earnings has moved up by one cent per share in the last 60 days. So far this year, its share price has grown 4.5%.

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S&T Bancorp, Inc. (STBA): Free Stock Analysis Report

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Webster Financial Corporation (WBS): Free Stock Analysis Report

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