Bank OZK (OZK)
has had a rough 12-24 months relative to the “average” bank stock, as
investors have grown increasingly worried about OZK’s heavy exposure to
riskier construction lending, and particularly in markets like New York
City and Miami, as well as its high beta funding structure. While the
shares have continued to underperform over the last three months,
operating performance has at least settled down.
If a
significant recession is right around the corner (or just a rough
period in commercial real estate), Bank OZK will have problems – the
bank’s underwriting has always been sound, but it’s tough to thrive if
and when your neighborhood is on fire. If the bank can navigate this
cycle without significant losses and maintain a long-term core earnings
growth rate in the high-single digits, though, the valuation on these
shares is pretty interesting today.
Read more here:
A 'Boring' Quarter At Bank OZK Is Just Fine
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