RBC Capital Adjusts Price Target on BOK Financial to $120 From $113, Maintains Sector Perform Rating

Have you been paying attention to shares of BOK Financial (BOKF)? Shares have been on the move with the stock up 13.6% over the past month. The stock hit a new 52-week high of $119.52 in the previous session. BOK Financial has gained 38.8% since the start of the year compared to the 24.1% move for the Zacks Finance sector and the 31.2% return for the Zacks Banks - Southwest industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 21, 2024, BOK Financial reported EPS of $2.18 versus consensus estimate of $2 while it beat the consensus revenue estimate by 1.35%.

For the current fiscal year, BOK Financial is expected to post earnings of $8.07 per share on $2.03 billion in revenues. This represents a -5.5% change in EPS on a -1.73% change in revenues. For the next fiscal year, the company is expected to earn $8.51 per share on $2.17 billion in revenues. This represents a year-over-year change of 5.5% and 7.01%, respectively.

Valuation Metrics

BOK Financial may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

BOK Financial has a Value Score of A. The stock's Growth and Momentum Scores are D and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 14.7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 16X. On a trailing cash flow basis, the stock currently trades at 11.9X versus its peer group's average of 11X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, BOK Financial currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if BOK Financial passes the test. Thus, it seems as though BOK Financial shares could have potential in the weeks and months to come.

How Does BOKF Stack Up to the Competition?

Shares of BOKF have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Texas Capital Bancshares, Inc. (TCBI). TCBI has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of B.

Earnings were strong last quarter. Texas Capital Bancshares, Inc. beat our consensus estimate by 67.01%, and for the current fiscal year, TCBI is expected to post earnings of $5.78 per share on revenue of $994.18 million.

Shares of Texas Capital Bancshares, Inc. have gained 15.1% over the past month, and currently trade at a forward P/E of 20.61X and a P/CF of 18.02X.

The Banks - Southwest industry is in the top 12% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BOKF and TCBI, even beyond their own solid fundamental situation.

Zacks Investment Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is BOK Financial (BOKF). BOKF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 12.69. This compares to its industry's average Forward P/E of 14.05. Over the past 52 weeks, BOKF's Forward P/E has been as high as 13.82 and as low as 8.43, with a median of 11.61.

Investors should also recognize that BOKF has a P/B ratio of 1.30. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.98. BOKF's P/B has been as high as 1.41 and as low as 0.89, with a median of 1.13, over the past year.

Finally, investors will want to recognize that BOKF has a P/CF ratio of 12.40. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 18.18. Over the past year, BOKF's P/CF has been as high as 13.38 and as low as 6.04, with a median of 10.69.

These are just a handful of the figures considered in BOK Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BOKF is an impressive value stock right now.

Zacks Investment Research