Fastest Growing BanksWritten by Ophir Gottlieb, 12-21-2015
In an aging bull market with stretched valuations and rising interest rates there is one antidote to a market pull back. That antidote is growth.
The market has now placed an enormous premium on growth and an equal, if not harsher, punishment on missed growth. Let's look at the banking sector and see which firms are growing revenue, earnings and assets the fastest in the last year. We'll end up with a group of three, one of which is hands down the best bank in the United States.
Let's start with banks above $5 billion in market cap and rank them on a scatter plot by one-year revenue growth percent.
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We're going to find a guiding theme here, so let's remember the top performers on this chart: PACW, OZRK, SBNY and BAP. Also, as a quick guide, I will highlight the "big four" (BAC, JPM, WFC, C) in yellow on each chart.
But of course, there's more to revenue when it comes to valuing a company. Let's next turn to earnings (aka net income). We'll plot the same population and rank net income (TTM) 1-year growth.
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Note again we see PACW, OZRK, SBNY and BAP in the top of earnings growth. A theme is forming.
Finally, we can do the same charting but this time look at asset growth.
Near the top again are OZRK, SBNY and BAP. These three banks are consistently at the top of revenue, earnings and asset growth. One of these three has been singled out as the single best bank stock in the world on CML Pro.
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WHY THIS MATTERS
The top analysts, asset managers and hedge fund managers are keenly aware of the data that will move markets. They actually create their own price to sales (valuations) models. In fact, this is the beginning of the process which identified the single best bank stock in the United States which is almost entirely owned by institutions. Continuing the analysis to include the efficiency ratio, revenue per employee, non-performing loans and other metrics gets us to the crown jewel.
Data like this, until now, has been kept away from retail investors, especially in a format that's so easy and so fast to digest. The information asymmetry that exists between pros and non-pros has transferred massive wealth to the top 1% from the rest of us. That information asymmetry is no longer acceptable to us.
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