On Nov 28, 2016, we issued an updated research report on SVB Financial Group SIVB. The company’s strong capital base and a solid balance sheet make it well positioned for future growth.
Shares of the company which increased 40.5% over the last six months, outperformed 21.0% gain for the Zacks categorized Banks-West industry. Notably, shares of SVB Financial have increased approximately 28.4% year to date.
SVB Financial has been witnessing solid growth in deposits and net interest income (NII). Notably, NII has grown at a CAGR of 19.2% over the last six years (2010–2015), while its deposits have grown at a CAGR of 22.2% over the same time frame. This, along with a change in its deposit mix is expected to further drive the company’s organic growth in the near term.
The company, through redemptions and maturities of senior notes has been constantly trying to lower its long-term debt level. A fall in debt level is expected to help it procure additional finance for working capital, as well as for capital expenditure, acquisitions, debt-service requirements and other purposes. Also, it is likely to lead to a lower interest expense, which in turn, would improve the bottom line.
Further, owing to the company’s earnings power, its capital position looks favorable. Notably, as of Sep 30, 2016, its capital ratios were above the regulatory requirements. The company is expected to continue building capital over the next couple of years, which will lead to a better financial position.
Nonetheless, consistently rising operating expenses and pressurized net interest margin amid a low rate environment, continue to be matters of concern for SVB Financial. Also, a stricter regulatory environment and higher capital requirements might considerably affect the lending as well as the investment ability of the company in the future.
Also, over the past 60 days, the Zacks Consensus Estimate has been revised upward by nearly 4.7% to $7.13 per share for 2016.
Currently, SVB Financial carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other stocks in the finance space worth a look include Carolina Financial Corporation CARO, Bank of America Corporation BAC and Comerica Incorporated CMA.
Carolina has witnessed an upward earnings estimate revision of 12.9% for the current year over the past 60 days. Its share price has risen 47.1% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank of America currently carries a Zacks Rank #2. For the current year, over the past 60 days, its Zacks Consensus Estimate has been revised 15.7% upward. Its share price has increased 20.6% year to date.
Comerica also carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 9.2% for the current year over the past 60 days, while its share price is up 46.1% year to date.
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