Benefits from a stabilizing economy and improving interest-rate scenario have well positioned the banking industry. Moreover, lower commercial tax rate are likely to further boost profitability of the banks.
In addition, relieving banks from some of the stringent requirements of the Dodd-Frank Act has made the companies optimistic of future earnings growth and raised investors’ sentiments as well.
Therefore, we are considering two such banks that are well poised to benefit from the improving economic backdrop — Cullen/Frost Bankers, Inc. CFRand BOK Financial Corporation BOKF— the two Southwest banks. Being based in the same region, both companies are influenced by a similar economic environment.
The Zacks Industry Rank is #74 (top 29% of the 250 plus Zacks industries) for the industry, to which these two companies belong to. Our back-testing shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
Cullen/Frost, with a market cap of $7.4 billion, offers a wide range of commercial and consumer banking services in Texas, operating around 134 financial centers and nearly 1,300 ATMs. On the other hand, BOK Financial provides various financial products and services in Oklahoma, Texas, New Mexico, Northwest Arkansas, Colorado, Arizona and Kansas/Missouri, and has a market cap of $6.7 billion.
Cullen/Frost sports a Zacks Rank #1 (Strong Buy), while BOK Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Though both banks have similar business trends, deeper research into the financials will help decide which investment option is better.
Price Performance
Both banks have outperformed the industry (down 2.8%) over the last six months and gained decently. While shares of Cullen/Frost have rallied 15.7%, BOK Financial has recorded growth of 13.9%. So, Cullen/Frost performed better than BOK Financial.