Is Bank OZK a castle with a wide moat or a tent in the middle of a no man’s land?
Hello guys, today we’re going to talk about a company I mentioned a few days before in my post about ALLY. It’s a regional bank which hires 2,646 employees and provides real estate, consumer, small business, indirect recreational vehicle and marine and equipment loans among many other ones as well.
Why am I mentioning this bank? A glance at their dividend statistics show a very interesting buy:
They have a low pauout ratio, dividend growth of 11.94% year-over-year, and a yield of 4%. If it were a tech company like Microsoft, I would have bought it right away, but as it’s a bank, I’m not sure this is a good investment. Banks have one thing in common: whenever a client takes a loan, it’s listed as an asset for the bank, as the client is paying it off, but what if the client doesn’t pay it off? That’s what I don’t like about banks.
They specialize in commerical loans, which means that due to their low customer count (as they aren’t a nation-wide known bank), their revenue can suffer if there aren’t that many business woners looking for loans.
Financials:
Looking atheir net income, I must say that I’m impressed, as banks like Bank of America have income like this:
Which clearly shows you that you shouldn’t always pick the ‘‘obvious’’ company to buy.
A regional bank has some advantages over a nation-wide bank, however, as because they are smaller, they are more adaptive to change. They can experiment with making the majority of their services online, like ALLY, as that means higher profit margins for them.
I think OZK is the bank I would choose If I had to buy a bank stock, but I would rather buy Visa, as they don’t have to take on any of their client’s debt, unlike banks, which have to. Compre their deposits year-over-year growth to other banks:
OZK Bank:
WFC:
Forecasted earnigs and revenue growth for next year, respectively:
7.8% and 9,4%.
Here is an interesting article about them expanding their locations:
Visitors to the new Costco in west Little Rock have undoubtedly noticed signs of fresh construction nearby, where Bank OZK is constructing a new branch. Polk Stanley Wilcox Architects posted to Facebook that the Chenal Parkway branch, which broke ground in May, will feature a “unique design” and cutting-edge banking technology.
Before ending, look at their insider buying that was recently:
Simplywall.st valuation:
This isn’t financial advice. Do your own research.