Zions Bancorp (ZION) Stock Gains on Restructuring Announcement

NEW YORK (TheStreet) -- Shares of Zions Bancorporation (ZION) were gaining 6.4% to $30.42 on heavy trading volume Tuesday after the regional bank announced a corporate restructuring.

As part of the restructuring Zions said it will consolidate seven bank charters into one while maintaining local CEOs, local pricing, local credit authority, and local branding. The company will also create a new Chief Banking Officer position, consolidate risk functions, and "various non-customer facing operations."

The company hopes to achieve an efficiency ratio in the low 60s by fiscal year 2017 as a result of the restructuring. Zions will maintain "noninterest expense below $1.60 billion in 2015 and 2016, and increasing somewhat in 2017," excluding severance and other restructuring-related items.

About 5.3 million shares of Zions were traded by 10:52 a.m. Tuesday, above the company's average trading volume of about 2.2 million shares a day.

TheStreet Ratings team rates ZIONS BANCORPORATION as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZIONS BANCORPORATION (ZION) a BUY. This is driven by some important positives, 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 expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for ZIONS BANCORPORATION is currently very high, coming in at 94.81%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ZION's net profit margin of 16.13% significantly trails the industry average.
  • ZION, with its decline in revenue, slightly underperformed the industry average of 0.0%. Since the same quarter one year prior, revenues slightly dropped by 5.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Banks industry and the overall market, ZIONS BANCORPORATION's return on equity is below that of both the industry average and the S&P 500.
  • ZIONS BANCORPORATION's earnings per share declined by 9.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ZIONS BANCORPORATION increased its bottom line by earning $1.70 versus $1.58 in the prior year. For the next year, the market is expecting a contraction of 7.5% in earnings ($1.57 versus $1.70).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income has decreased by 9.1% when compared to the same quarter one year ago, dropping from $101.21 million to $92.03 million.
  • You can view the full analysis from the report here: ZION Ratings Report

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