ZetaKap's  Instablog

ZetaKap
Send Message
ZetaKap Media is a financial news media outlet that provides fresh, accurate, and actionable news. If you devour financial news, look no further than ZetaKap. Follow ZetaKap on twitter for the latest financial news updates: @zetakap
My company:
ZetaKap Media
My blog:
ZetaKap Media
  • 5 Profitable Financial Stocks With Minimal Debt 0 comments
    Sep 26, 2012 10:33 AM | about stocks: CME, EWBC, HOMB, MOFG, VRTS

    While many investors have an understandable amount of reticence regarding the financial sector, there are companies worth considering. To find companies with their finances in order, we focused on two traits, strong profits demonstrated by recent EPS growth rates and marginal debt. These two indicators bring to light companies that have not resorted to debt to keep the doors open, instead they have generated strong earnings in the past year. We think you find these financial stocks worthy of further investigation.

    The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

    EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.

    The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue

    We first looked for financial stocks. Next, we then screened for businesses that operate with little to no long term debt (Long Term D/E Ratio<.1). We next screened for businesses that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%)(Net Margin [TTM]>10%). We did not screen out any market caps.

    Do you think these stocks will go up in valuation? Use our list along with your own analysis.

    1) MidWest One Financial Group, Inc. (NASDAQ:MOFG)

    Sector Financial
    Industry Regional - Southwest Banks
    Market Cap $186.56M
    Beta 0.77

    MOFG stock chart

    Key Metrics

    Long Term Debt/Equity Ratio 0.09
    Earnings Per Share Growth Rate 36.89%
    Net Margin 21.20%
    Short Interest 2.87%

    MidWestOne Financial Group, Inc. operates as the holding company for MidWestOne Bank that provides retail banking products and services for individuals, businesses, governmental units, and institutional customers. individuals and small businesses. The company operates 25 branches and a specialized home loan center in central and east-central Iowa; and owns 46 ATMs. MidWestOne Financial Group, Inc. is headquartered in Iowa City, Iowa.

    2) East West Bancorp, Inc. (NASDAQ:EWBC)

    Sector Financial
    Industry Regional - Pacific Banks
    Market Cap $3.10B
    Beta 1.39

    EWBC stock chart

    Key Metrics

    Long Term Debt/Equity Ratio 0.09
    Earnings Per Share Growth Rate 93.63%
    Net Margin 29.17%
    Short Interest 2.41%

    East West Bancorp, Inc. operates as the holding company for East West Bank, which provides a range of personal and commercial banking services to small and medium-sized businesses, business executives, professionals, and other individuals in California. As of April 5, 2012, it operated through a network of 130 locations worldwide. In addition, the company, through its other subsidiary, East West Insurance Services, Inc., offers business and consumer insurance services to the southern California market. The company was founded in 1998 and is headquartered in Pasadena, California.

    3) Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB)

    Sector Financial
    Industry Money Center Banks
    Market Cap $964.55M
    Beta 0.62

    HOMB stock chart

    Key Metrics

    Long Term Debt/Equity Ratio 0.09
    Earnings Per Share Growth Rate 254.71%
    Net Margin 30.77%
    Short Interest 5.41%

    Home BancShares, Inc. operates as a holding company for the Centennial Bank that provides various commercial and retail banking, and related financial products and services to businesses, real estate developers, investors, individuals, and municipalities. As of December 31, 2010, it operated 49 branches in Arkansas, 9 branches in the Florida Keys, 6 branches in central Florida, 3 branches in southwest Florida, and 29 branches in the Florida Panhandle. Home BancShares, Inc. is headquartered in Conway, Arkansas.

    4) CME Group Inc. (NASDAQ:CME)

    Sector Financial
    Industry Investment Brokerage - National
    Market Cap $19.27B
    Beta 1.12

    CME stock chart

    Key Metrics

    Long Term Debt/Equity Ratio 0.10
    Earnings Per Share Growth Rate 89.73%
    Net Margin 49.71%
    Short Interest 2.45%

    CME Group Inc. operates the CME, CBOT, NYMEX and COMEX futures exchanges worldwide. The company provides a range of products across various asset classes, such as interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather, and real estate. Its customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group Inc. was founded in 1898 and is headquartered in Chicago, Illinois.

    5) Virtus Investment Partners, Inc. (NASDAQ:VRTS)

    Sector Financial
    Industry Asset Management
    Market Cap $694.36M
    Beta 2.10

    VRTS stock chart

    Key Metrics

    Long Term Debt/Equity Ratio 0.10
    Earnings Per Share Growth Rate 1919.39%
    Net Margin 62.99%
    Short Interest 3.05%

    Virtus Investment Partners, Inc. provides investment management products and services to individuals and institutions in the United States. The company operates a multi-manager asset management business, comprising various individual affiliated managers, each with its own investment style, autonomous investment process, and individual brand. It supplements the investment capabilities of its affiliated managers partnering with select unaffiliated sub-advisors whose strategies are not available to retail mutual fund customers. The company is headquartered in Hartford, Connecticut.

    *Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/23/2012.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.

    Stocks: CME, EWBC, HOMB, MOFG, VRTS
Back To ZetaKap's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.