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Why to Add Washington Federal (WAFD) Stock to Your Basket


With the Q1 earnings season almost at its end, the Finance sector seems to be one of the best performers. So, stocks with strong fundamentals and solid long-term growth opportunities from the sector can be added to the portfolio.

One such promising stock is Washington Federal, Inc. WAFD. Based on its solid fundamentals, we believe it has plenty of upside potential. Also, the company is diligently involved in the capital deployment activities.

Further, the company not only beat estimates this time, but also has been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 30 days, the Zacks Consensus Estimate for 2017 and 2018 moved up 1.1% and 2.5%, respectively.

Additionally, shares of this Zacks Rank #2 (Buy) stock have gained 30.5% in the last one year compared with growth of 31.3% recorded by the Zacks categorized Northeast Banks industry.

Notably, Washington Federal has a number of other aspects that make it an attractive investment option.

4 Reasons Why Washington Federal is an Attractive Pick

Revenue Growth: Organic growth remains a key strength at Washington Federal, with sales recording a compounded annual growth rate (CAGR) of 2.8% over the four-year period (2013-2016). Moreover, growth in loans indicates a strong business trend for the bank.

The company’s projected sales growth (F1/F0) of 1.8% (as against the nil industry average) indicates consistent upward momentum in revenues.

Earnings Per Share Strength: Washington Federal witnessed earnings growth of 7.6% over the last three–five years. In addition, the company’s long-term (three–five years) estimated EPS growth rate of 3.9% promises rewards for investors over the long run. Also, it recorded an average positive earnings surprise of 6.8% over the trailing four quarters.

Steady Capital Deployment: Washington Federal’s trend of returning capital to shareholders is likely to boost investors’ confidence in the stock. Since fiscal 2011, the company has been annually increasing its dividend. The last hike was announced in Jan 2017. Furthermore, the company has its share repurchase program in place.

Stock is Undervalued: Washington Federal has a P/E and P/B ratios of 17.30x and 1.45x compared to the S&P 500 average of 18.72x and 3.21x, respectively. Based on these ratios, the stock seems undervalued.

Stocks to Consider

Comerica Incorporated CMA has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock jumped over 10% over the past six months. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northern Trust Corporation NTRS has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 4.8% over the last six months. It presently holds a Zacks Rank #2.

The PNC Financial Services Group, Inc. PNC has been witnessing upward estimate revisions for the last 30 days. Over the last six months, the company’s share price has been up more than 5.9%. It carries a Zacks Rank #2.

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