"Zion expects to generate a double-digit return on tangible common equity over time, but this is subject to the magnitude of capital return, the extent to which rates rise, normalized credit losses, and the level of preferred stock," Jefferies analysts noted.
The firm increases 2015 earnings to $1.60 from $1.50, with 2016 operating earnings per share estimates to $2.10 from $1.95.
Zions is expected to hold operating expenses below $1.6 billion in 2015 and 2016, and then to see an increase to slightly above $1.6 billion in 2017.
Zions Bancorporation is a financial holding company that owns and operates eight commercial banks with a total of approximately 460 domestic branches.
Separately, 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 a number of strengths, 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, notable return on equity and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
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 0.1%. 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.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- 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 6.5% in earnings ($1.59 versus $1.70).
- You can view the full analysis from the report here: ZION Ratings Report