Should We Be Bullish on Zions Bancorporation N.A.?

Zions Bancorporation N.A. may be undervalued with poor growth indicators, but the 18 analysts following the company give it an rating of hold. Their target prices range from $27.0 to $45.0 per share, for an average of $36.75. At today's price of $38.25, Zions Bancorporation N.A. is trading 4.08% away from its average target price, suggesting there is an analyst consensus of little upside potential for the stock.

Zions Bancorporation, National Association provides various banking and related services primarily in the states of Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming. The company offers corporate banking services; commercial banking, including a focus on small- and medium-sized businesses; commercial real estate banking services; municipal and public finance services; retail banking, including residential mortgages; trust services; wealth management and private client banking services; and capital markets products and services. The company was formerly known as ZB, National Association and changed its name to Zions Bancorporation, National Association in September 2018. Based in Salt Lake City, UT, the mid-cap Finance company has 9,989 full time employees. Zions Bancorporation N.A. has not offered a regular dividend during the last year.

Zions Bancorporation N.A. has a trailing twelve month P/E ratio of 6.5, compared to an average of 14.34 for the Finance sector. Considering its EPS guidance of $4.3, the company has a forward P/E ratio of 8.9.

The average compound growth rate of the company's historical and projected earnings per share is 0.5%. On this basis, the company's PEG ratio is 9.92. However, this growth rate is probably not sustainable. In its place we will use the broader market's estimated 5-year EPS growth rate of 6.0%, which gives us a PEG ratio of 0.86. Even with this more conservative assumption on EPS growth, the PEG ratio suggests that Zions Bancorporation N.A. shares are underpriced.

On the other hand, the market is potentially undervaluing Zions Bancorporation N.A. in terms of its book value because its P/B ratio is 1.28. In comparison, the sector average P/B ratio is 1.57. The company's shares are currently -34.5% below their Graham number, indicating that its shares have a margin of safety.

So why does Zions Bancorporation N.A. get a bad rating from most analysts despite its seemingly attractive valuation? One reason could be its worrying EPS growth rate of 8.7%.

2020-02-26 2021-02-25 2022-02-25 2023-02-23
Revenue (MM) $2,834 $2,790 $2,911 $3,152
Operating Margins 37.2% 24.1% 49.7% 36.6%
Net Margins 28.79% 19.32% 38.78% 28.78%
Net Income (MM) $816 $539 $1,129 $907
Depreciation & Amort. (MM) -$188 -$86 --$14 -$110
Earnings Per Share $4.19 $3.05 $7.16 $5.85
EPS Growth n/a -27.21% 134.75% -18.3%
Diluted Shares (MM) 187 166 154 148
Free Cash Flow (MM) $814 $890 $835 $1,660
Capital Expenditures (MM) -$117 -$171 -$206 -$190
Long Term Debt (MM) $1,723 $1,336 $1,012 $651
LT Debt to Equity 0.23 0.17 0.14 0.13
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.