Washington Federal, Inc.’s WAFD organic growth strategy driven by higher loan demand and increase in interest rates will continue to support its profitability. Strong balance-sheet position and lower tax rates are the other tailwinds.

This Zacks Rank #2 (Buy) stock has gained 3.6% over the past year, slightly outperforming 3.5% growth recorded by the industry.  Also, its current-fiscal earnings estimates moved up marginally over the last 60 days, reflecting the stock’s upside potential.

Reasons Why Washington Federal is an Attractive Pick

Earnings Growth: Over the past three to five years, Washington Federal witnessed earnings growth of 8.9%. Notably, the company’s earnings are expected to display an upswing in the near term as its projected earnings growth are 22.2% for fiscal 2018 and 8.9% for fiscal 2019.
Further, the long-term expected earnings growth rate of 10% promises rewards for its shareholders. Additionally, the company has an impressive earnings surprise history, with positive earnings surprise of 5.6% in the preceding four quarters.

Revenue Growth: Washington Federal continues to make steady progress toward improving its top line. Additionally, the company has been witnessing impressive loan growth for the last few years, with trend likely to continue in the years ahead. Steady growth in loans will likely support revenue generation, going ahead. The company’s projected sales growth of 7.6% for fiscal 2018 and 5.3% for fiscal 2019 indicates constant upward momentum in revenues.

Steady Capital Deployment: Washington Federal’s strong balance-sheet position has enabled it to increase dividends every year since 2011 (the latest hike was announced in July 2018). In addition, the company has its share-repurchase program in place. As of Jun 30, 2018, it had authorization to repurchase around 2.9 million shares. Driven by robust financials and strong liquidity position, the company’s capital-deployment activities look sustainable.

Superior Return on Equity (ROE): Washington Federal’s ROE of 9.93% reflects its superiority in terms of utilizing shareholders’ funds. The figure also compares favorably with the industry’s ROE of 9.34%.

Key Picks

A few better-ranked stocks in the same space are Blue Hills Bancorp, Inc. BHBK, Independent Bank Corp. INDB and First Mid-Illinois Bancshares, Inc. FMBH. All these stocks flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

Over the last 60 days, the Zacks Consensus Estimate for Blue Hills’ current-year earnings has been revised 8.7% upward. Its share price has gained 20.7% in the past year.

Independent Bank’s earnings estimates for 2018 have been revised 5.6% upward over the past 60 days. Its shares have rallied 25.3% in a year’s time.

Over the last 60 days, First Mid-Illinois’ 2018 earnings estimate moved 3.7% north. Over the past year, its share price has appreciated 17.5%.

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Washington Federal, Inc. (WAFD) : Free Stock Analysis Report
 
Independent Bank Corp. (INDB) : Free Stock Analysis Report
 
First Mid-Illinois Bancshares, Inc. (FMBH) : Free Stock Analysis Report
 
Blue Hills Bancorp, Inc. (BHBK) : Free Stock Analysis Report
 
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