Will EverBank Continue to Impress?

With shares of EverBank Financial Corp. (EVER) trading at around $15.07, is EVER an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

EverBank’s IPO was priced at $10. The stock is currently trading at $15.07. There was no jaw-dropping spike in the stock price over the past 11 months. Rather, it has been a steady ascent, which is what every seasoned investor wants to see.

EverBank has a lot going for it at the moment, but prior to getting to this information, it’s important to understand that EverBank isn’t your tradition regional bank. It operates in three segments: Banking & Wealth Management (deposit and investment products/services and portfolio lending and leasing), Mortgage Banking (origination and services of residential mortgage loans), and Corporate Services (business money market/commercial real estate lending/foreign exchange service). So far, EverBank might not seem that unique. However, that would be far from the truth.

For example, EverBank offers foreign currency CDs. This is a great option for investors that are sick and tired of not being able to take advantage of a safe and secure CD in the United States due to low interest rates. The only catch for foreign currency CDs is exchange rates, but a little research can go a long way in this regard.

EverBank also offers Diversified Portfolios (conservative/moderate/aggressive), Enhanced Yield Portfolio (target yield of 5 percent to 6 percent that limits risk while maximizing potential), and support and research tools for real-time trading in foreign or domestic markets.

EverBank purchased GE Capital’s Business Property Lending Inc. unit for $2.4 billion. This unit provides commercial loans for essential properties owned or leased by small and midsize businesses as well as single and multi-credit tenant lease financing nationwide.

EverBank is currently enjoying credit quality improvement, strong noninterest income, and consistent gains in market share. The Mortgage Banking segment also saw record residential volumes in the fourth quarter. All that said, is EverBank a good investment at this time? We’ll get to that in the Conclusion section. In the meantime, let’s take a look at the chart below, which compares fundamentals for EverBank, F.N.B. Corporation (NYSE:FNB), and Trustmark Corporation (NASDAQ:TRMK). These three regional banks are similar in size. EverBank has a market cap of $1.84 billion, FNB. has a market cap of $1.62 billion, and Trustmark has a market cap of $1.55 billion.

EVER

FNB

TRMK

Trailing   P/E

25.12

14.90

13.23

Forward   P/E

10.05

12.99

13.68

Profit   Margin

7.04%

23.34%

23.45%

ROE

6.12%

8.45%

9.37%

Operating   Cash Flow

-$1.02 Billion

$544.03 Million

$92.12 Million

Dividend   Yield

0.50%

4.00%

3.70%

Short   Position

3.40%

N/A

N/A

 

Let’s take a look at some more important numbers prior to forming an opinion on this stock.

E = Equity to Debt Ratio Is Weak

The debt-to-equity ratio for EverBank is weaker than the industry average of 1.20.

Debt-To-Equity

Cash

Long-Term Debt

EVER

2.19

$322.47 Million

$3.34 Billion

FNB

0.98

$297.05 Million

$1.43 Billion

TRMK

0.38

$197.94 Million

$494.09 Million

 

T = Technicals Are Strong

The numbers below are deceiving as one year of trading hasn’t been completed yet.

1 Month

Year-To-Date

1 Year

3 Year

EVER

-6.57%

1.28%

0.67%

N/A

FNB

2.48%

12.05%

3.46%

61.79%

TRMK

2.18%

7.66%

2.04%

8.91%

 

At $15.07, EverBank is trading below its 50-day SMA, and above its 100-day SMA and 200-day SMA.

50-Day   SMA

15.14

100-Day   SMA

14.95

200-Day   SMA

13.81

 

E = Earnings Have Been Inconsistent                 

Aside from a setback in 2011, revenue has marched higher. Earnings have been inconsistent, but the company always shows a profit, and earnings estimates are strong going forward.

2008

2009

2010

2011

2012

Revenue   ($)in   millions

498.28

672.69

970.31

821.32

1.03B

Diluted   EPS ($)

0.85

0.78

1.94

0.54

0.60

 

When we look at the last quarter on a year-over-year basis, we see large increases in revenue and earnings.

12/2011

3/2012

6/2012

9/2012

12/2012

Revenue   ($)in   millions

206.67

218.62

230.72

258.56

317.42

Diluted   EPS ($)

0.14

0.08

0.09

0.19

0.24

 

Now let’s take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

T = Trends Support the Industry

Housing is an integral piece of the puzzle, and right now, housing is in raging-bull mode. Credit markets have stabilized, interest rates are low, and demand is high. Is this environment sustainable? Not likely. However, it will likely last for a considerable amount of time before reality sets in once again.

Conclusion

EverBank is a well-run, aggressive, and focused bank that has many different revenue streams. As long as the economy holds, the stock price should continue its ascent. The average price target for analysts is $17. Of seven analysts covering the stock, five have rated it a Buy, four have rated it a Hold, and zero have rated it a Sell.

EverBank is an OUTPERFORM, but keep an eye on market conditions.

Using a solid investing framework such as this can help improve your stock-picking skills. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.