Bank of the Ozarks Hits 52-Week High - Analyst Blog

Riding on a steady growth momentum, shares of Bank of the Ozarks Inc. OZRK reached its 52-week high of $68.26 on Mar 13. This regional bank has witnessed a jump of about 19% since the beginning of 2014 itself.

Moreover, the encouraging momentum of this Zacks Rank #2 (Buy) stock is fuelled by strategic initiatives and improved inorganic growth coupled with a sturdy liquidity and competitive position. Yesterday's closing price represents a robust one-year return of about 61.9%, against 31.3% clocked by the Nasdaq index. Average volume of shares traded over the last three months stands at approximately 208.5K.

Earnings Review

On Jan 16, Bank of the Ozarks reported fourth-quarter 2014 operating earnings per share of 66 cents, topping the Zacks Consensus Estimate of 64 cents and the year-ago number of 59 cents. With this, the company delivered a positive earnings surprise of 3.1% during the quarter.

Results reflected higher interest income and book value per share. These were partially offset by lower non-interest income as well as higher loan loss provisions and non-interest expenses.

Rationale

Moreover, Bank of the Ozarks boasts ofstellar asset quality along with excellent loan and lease growth. The acquisition of The First National Bank of Shelby in Jul 2013 is also showing results. Going ahead, the buyout of Texas-based Bancshares Inc. earlier this month and the pending acquisition of Arkansas-based Summit Bancorp Inc. are expected to be accretive to book value and earnings within the first year of their purchases, boosting operating and competitive efficiencies at the company.

Alongside, disciplined expense management scores well for improving margins and operating leverage. Concurrently, Bank of the Ozarks maintains stable capital management, which in turn, leaves ample scope for pursuing capital deployment strategies. We believe the upcoming quarters should benefit from the company's operating and capital actions, as reflected in the market's positive reaction.

Some better-ranked banking stocks that warrant a look are SY Bancorp Inc. SYBT, Access National Corp. ANCX and West BanCorp. Inc. WTBA. All these stocks sport a Zacks Rank #1 (Strong Buy).