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Western Alliance Bancorporation WAL appears to be a solid bet now, driven by strong fundamentals and promising prospects. Moreover, the company's steady capital deployments reflect a strong balance sheet position.
Further, analysts seem to be optimistic about the company as the stock is witnessing upward estimate revisions. The Zacks Consensus Estimate for earnings has moved 18.1% and 18.5% upward, over the past 60 days, for 2021 and 2022, respectively. Backed by positive estimate revisions and strong fundamentals, the company currently carries a Zacks Rank #2 (Buy).
Also, its price performance is impressive. The stock has rallied 76% in the past six months, outperforming the industry’s rise of 46%.
What Makes Western Alliance Stock a Solid Pick
Earnings strength: Western Alliance has recorded an earnings growth rate of 19.5% over the past three to five years compared with the industry average of 10.2%. Continuing the momentum, the earnings growth rate is expected to be 60.3% and 12.5% for 2021 and 2022, respectively.
Revenue growth: Western Alliance continues to make steady progress toward improving its top line. Its revenues recorded a five-year (ended 2018) CAGR of 15.7%. Also, the company’s loan and deposit balance remains strong. This, along with an improving operating backdrop, will keep supporting its financials.
The company’s projected sales growth rate of 49.8% for 2021 indicates continued upward momentum in revenues.
Strong balance sheet position: As of Mar 31, 2021, the company had a debt level of $564.6 billion, which remained volatile over the past few quarters. Debt-to-capital ratio of 0.13, as of the same date, witnessed a declining trend. The company's cash and cash equivalents & dues from banks were $215.3 billion on the same date. Furthermore, with an improving times interest earned ratio of 31.3 and earnings strength, Western Alliance carries low credit risk, and has a lesser likelihood of default of interest and debt repayments, if the economic situation worsens.
Robust capital deployment plan: Western Alliance has an impressive capital deployment plan in place. The bank initiated regular quarterly dividends from third-quarter 2019, and has been maintaining the level since.
Further, it continues to return capital to shareholders through share repurchases. Given the strong balance sheet position and earnings strength, the bank will be able to sustain its capital deployment actions.
Superior return on equity: Western Alliance has a return on equity of 18.29% compared with the industry average of 10.3%. This indicates that the company reinvests more efficiently compared to its peers.
Other Stocks to Consider
Wells Fargo & Company WFC has witnessed a 1.9% upward estimate revision over the past 30 days. The company’s shares have rallied 53.2% so far this year. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank of Hawaii Corporation’s BOH shares have gained 17.7% so far this year. Further, the company’s earnings estimates for the ongoing year have moved 11.1% north in the past 60 days. It currently has a Zacks Rank of 2.
UMB Financial Corporation UMBF has witnessed 25.9% upward estimates revision for the current-year over the past 30 days. Shares of this Zacks #2 Ranked stock have gained 41.5% so far this year.
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Wells Fargo & Company (WFC) : Free Stock Analysis Report
UMB Financial Corporation (UMBF) : Free Stock Analysis Report
Western Alliance Bancorporation (WAL) : Free Stock Analysis Report
Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report
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