The bank predicted positive operating leverage in 2015, with revenue growth exceeding noninterest expense growth of 2% to 4%.
On Thursday, the Columbus, Ohio-based bank also said it earned $163.6 million in the quarter ended in December. That amounted to 19 cents per share, up 5% year over year. Adjusted for one-time charges and gains, Huntington's earnings were 21 cents per share, beating analysts estimates by 2 cents.
For the year, Huntington said its earned a profit of $632.4 million, or 72 cents per share on revenue of $2.82 billion, slightly lower than analysts estimates of $2.83 billion.
"We met our commitments of positive operating leverage and revenue growth," said CEO Steve Steinour, in a press release. "We continue to invest opportunistically to position ourselves well as we move into 2015 and beyond."
That Huntington was able to sequentially increase its average earnings assets and average loans and leases by 9% and 8%, respectively, shows the effectiveness of its investments. Both metrics measure how well banks put their capital to use.
In the case of Huntington, which has return on equity of nearly 11.5%, it shows why the stock is likely to rise in the near future. Take a look at the charts below:
When compared with other regional banks such as PNC Financial (PNC - Get Report) (ROE of 9.6%), Comerica (CMA - Get Report) (ROE of 8.1%) and SunTrust Bank (STI - Get Report) (ROE of 8.3%), Huntington's ROE of almost 11.5% stands out.
Combined with Huntington's projection of positive earnings leverage in 2015, Huntington likely will be able to deliver even more value to shareholders this year. So investors should buy the stock now, especially because it's cheap.
The stock, at around $9 per share, is down more than 7% so far this year, against declines of 1.5% and 1.3% for the Dow Jones Industrial Average and the S&P 500, respectively. Huntington's stock won't be down for long, given its better-than-expected guidance, which may compel analysts to raise estimates.
For now, the average 12-month price target from analysts is $11, suggesting the stock can gain roughly 10% from current levels. (Shares were up 2.5% at $10.00 late Thursday morning.) And the highest price target, of $12, would yield 20% gains.
In short, Huntington is an underrated bank with a strong management team that understands where it needs to take the company. And with its yield of 2.5% and Huntington now projecting higher loan growth, these shares are a bargain.