Its shares are down 7% for the year to date, compared with declines of 1.73% and 1.77% for the Dow Jones Industrial Average and in the S&P 500, respectively.
Even so, this is an underrated bank with a strong management team that understands where it wants to take the company. And with better-than-expected results coming in from other regional banks such as PNC Financial (PNC - Get Report) and SunTrust Bank (STI - Get Report) , investors would be wise to place a bet on Huntington ahead of the release of its fourth-quarter results Thursday.
Aside from consistently increasing its core deposits, which are up 13% in the past couple of years, Huntington's business is no longer burdened by low-margin and risky wholesale funding, which is tied to pension funds, money market mutual funds and other forms of institutional liabilities. The company has worked to evolve the business to one that is both safer and easier to understand.
The stock is cheap, too, trading at trailing price-to-earnings ratio of 13, four points lower than both the Financial Select Sector SPDR Fund (XLF - Get Report) and the Vanguard Financials Index Fund ETF Shares (VFH - Get Report) that have P/E ratios of 17.
These funds are home to banks such as JPMorgan Chase (JPM - Get Report) and Wells Fargo (WFC - Get Report) . It also houses regionals such as BB&T (BBT - Get Report) and the aforementioned PNC and SunTrust Bank.
But Huntington, which is based in Columbus, Ohio, won't stay under-appreciated for long.
With more than 700 branches, spanning markets such as Kentucky, Michigan and Ohio, Huntington is already one of the largest banking brands in the Midwest. But the bank remains aggressive in its attempt to compete with other regional franchises.
Last year, to better compete with, among others, BB&T, Huntington picked off 24 Michigan branches from larger rival Bank of America (BAC - Get Report) , a deal that gave Huntington $750 million in customer deposits. Huntington also gained access to almost 200 additional branches in Michigan.
With net interest income surging 10% year over year in the recent quarter and core deposits growing 5% year over year, Huntington has already capitalized on these deals. And it will look to extend that streak Thursday.
Analysts expect fourth-quarter earnings of 19 cents a share on revenue of $721 million, representing year-over-year increases of 5.5% and 5.2%, respectively. For the full year, analysts are targeting earnings per share of 73 cents on revenue of $2.83 billion.
All told, this is far from a one-quarter story, given the value that Huntington can still create from its acquisitions. Huntington, which recently closed several branches, is still adding efficiency and cost savings to a business that already has a strong track record for profit growth.
With its yield of 2.46% and loan growth projected to rise, Huntington looks like a good bounce-back candidate this year. The stock has an average analyst 12-month price target of $11, which suggests 12.5% gains from current levels, and its high target of $12 would yield 23% gains.
TheStreet Ratings team rates HUNTINGTON BANCSHARES as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HUNTINGTON BANCSHARES (HBAN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
You can view the full analysis from the report here: HBAN Ratings Report