Yahoo Finance Zacks Investment Ideas feature highlights: SPDR S&P Regional Banking ETF and HSBC
For Immediate Release
Chicago, IL – May 22, 2023 – Today, Zacks Investment Ideas feature highlights SPDR S&P Regional Banking ETF KRE and HSBC Holdings HSBC.
This Large-Cap Stock Is Separating Itself from the Herd
Most financial stocks have had a rough go this year, as many banks and financial institutions have fallen victim to the recent regional banking stress. The SPDR S&P Regional Banking ETF, which targets the regional banking segment of the S&P Total Market Index and provides exposure to a mixture of large-cap, mid-cap, and small-cap banks, has fallen more than 33% this year.
While financial stocks have lagged the general market, several bigger banks have held up relatively well. We’ve seen this through past cycles when markets become turbulent. As feebler banks dissolve due to a weakening economic environment or mismanagement, the larger and better-capitalized banks typically benefit.
One glaring reason why we may want to consider banks in this environment is valuation. The Zacks Banks – Foreign industry group is currently ranked in the top 47% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform over the next 3 to 6 months. The banks in this industry are relatively undervalued, and are projected to experience above-average earnings growth.
Quantitative research studies have shown that approximately half of a stock’s price appreciation can be attributed to its industry group. By focusing on stocks within the top industries, we can dramatically improve our odds of success. Let’s take a look at a leading stock contained within this top industry group.
HSBC Holdings
HSBC Holdings provides banking and financial services globally. The company’s Wealth and Personal Banking segment offers retail banking and wealth products such as checking and savings accounts, mortgages and personal loans, credit and debit cards, and private wealth solutions. The Commercial Banking segment provides credit and lending, treasury management, commercial insurance, and capital raising services. In addition to private investors, HSBC serves government, corporate, and institutional clients.
HSBC has exceeded earnings estimates in two of the past four quarters, delivering an average 7.62% earnings surprise over that timeframe. The financial company most recently posted first-quarter earnings earlier this month of $2.60/share, a 48.6% surprise over consensus estimates. The stock is outpacing the market, returning north of 28% this year alone.
Analysts covering HSBC are in agreement in terms of earnings revisions and have raised estimates for the current fiscal year. EPS estimates for 2023 have surged 16.22% in the past 60 days. The Zacks Consensus Estimate is now $6.95/share, reflecting stellar growth of 87.8% relative to last year. Revenues are projected to climb 25.8% to $69.6 billion.
If you’ve been looking for a financial stock that is outperforming the market, look no further.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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HSBC Holdings plc (HSBC) : Free Stock Analysis Report
SPDR S&P Regional Banking ETF (KRE): ETF Research Reports
