Fifth Third Bancorp (Nasdaq: FITB) – is a diversified financial services company based in Cincinnati, Ohio. The company offers traditional banking products for commercial and individual customers.
All of the branches are in the eastern half of the United States. Fifth Third was founded in 1858.
The bank has seen solid earnings growth over the last few years with an annualized growth rate of 23% for the last three years.
Revenue has increased at a rate of 11% per year over the last three years.
The company did report fourth quarter results last week and came up a little short on EPS estimate. The earnings did decline by 1% compared to the fourth quarter of 2018. Revenue showed an increase of 32% for the quarter.
The management efficiency measurements are mixed with a return on equity that is average and a profit margin that is above average. The ROE for Fifth Third is 11.3% and its profit margin is a healthy 30.2%.
Sentiment toward Fifth Third shows mixed results as well. Analysts are less bullish on the stock that the average stock while short sellers are slightly more bullish on it. There are a total of 23 analysts covering the stock with 12 “buy” ratings, 10 “hold” ratings, and one “sell” rating. This puts the buy percentage at 52.2% and that is below average.
The short interest ratio is currently at 2.19 and that is lower than the ratio of the average stock. The short interest has fallen from 11.63 million to 8.39 million since the end of October. This is a sign of increasing optimism.
The weekly chart shows how the stock has been trending higher over the 13 months and how a trend channel has formed that helps define the different cycles within the overall upward trend. The lower rail of the channel is currently just above the $27 level.
The overbought/oversold indicators have been falling over the last month or so and they have now moved in to the lower half of their ranges. The 10-weeek RSI is at 43.01 and that is the lowest the indicator has been since August. The weekly stochastic indicators are near the level they reached in October. This is the last time the stock hit the lower rail of the channel before bouncing higher.
Suggested strategy: Buy FITB with a maximum entry price of $29.50. I would set a target of at least $37.00 over the next 9 to 12 months. I would suggest a stop loss at the $26.50 level.
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