Hancock Whitney Outperforming On Solid Execution And A Great Balance Sheet

I expected good things from Hancock Whitney (NASDAQ:HWC) in my last update on this Gulf Coast bank, and I haven’t been disappointed. While deposit outflows have been a little worse than I expected, deposit and loan betas have been quite strong and the company continues to execute well on costs. With that, the shares have outperformed since that last article, outperforming regional banks by more than 7% and bringing the year-to-date outperformance up to around 12%.

The only real negative I can’t point to here, apart from a deteriorating macro environment, is the valuation. Hancock Whitney has been doing well, but not well enough to drive substantial upside revisions to my numbers, and so the outperformance is chewing into some of the undervaluation I saw before. I’d rather own a more expensive high-quality bank than a cheaper low-quality bank, but investors probably shouldn’t expect much beyond a high single-digit to low double-digit return over the next year.

 

Click here to continue: 

Hancock Whitney Outperforming On Solid Execution And A Great Balance Sheet

Self-Help And Improving End-Markets Driving Hancock Whitney To Market-Beating Performance

 

I liked Hancock Whitney (HWC) back in July due to its combination of valuation, leverage to loan growth recovery in 2022, and self-help potential on expenses. While the COVID-19 pandemic has still had some negative impacts on the company’s core markets, the business has nevertheless been executing well and the shares are up almost 25% since that last article – handily beating not only the S&P 500, but also regional banks as a group.

I still like the story at Hancock, and I think the combination of loan growth, expense leverage, and rate leverage will serve the company well. While expectations are quite a bit higher now, and I do have some concerns about the year-over-year growth in pre-provision profits for 2022, I do still see double-digit upside for this name, and I consider it an under-followed name in the regional bank space.

 

Continue here: 

Self-Help And Improving End-Markets Driving Hancock Whitney To Market-Beating Performance

Hancock Whitney Performing Well As The Economy Starts To Reopen

 

I liked Hancock Whitney (NASDAQ:HWC) (“Hancock”) back in February of this year, seeing not only self-improvement potential in a bank that had admittedly underperformed heading into the pandemic, but also a “get better or get bought” safety net under the story. Since then, the company has performed quite well through the ongoing operating challenges all banks are facing, delivering two more quarters with meaningful pre-provision profit beats and operating leverage.

These shares are up another 18% or so from my last write-up, handily beating the near-flat performance of the larger regional banking index (KBW National Regional Bank Index). Even with that outperformance, I still see further upside here, as the Street not only isn’t giving credit to the ongoing operating leverage improvements and better-than-average loan growth, but also the possibility that these improvements are just the beginning and Hancock could achieve higher longer-term ROEs and ROTCEs.

 

Read the full article here: 

Hancock Whitney Performing Well As The Economy Starts To Reopen

Hancock Whitney Has Above-Average Upside, But It Requires Self-Improvement

With many banks on the prowl for M&A, I believe that to some extent banks will need to “earn” their right to stay independent; if a bank cannot generate sufficient returns on capital on their own, sooner or later another bank is going to make the shareholders an offer they won’t refuse. In the case of Hancock Whitney (HWC), a legacy of underperformance with respect to margins and returns (ROE, ROTCE, et al) but a good core deposit base makes this a prime candidate for a “get better or get bought” story.

Management at Hancock is still in the relatively early stages of a meaningful cost-cutting program that I believe, coupled with eventual improvements in interest rates, can drive returns on equity back to 10% or better and drive long-term core earnings growth in the mid-single-digits. That, and a low double-digit ROTCE in 2021 and 2022 should support a fair value in the low $40s and a double-digit annualized total return opportunity.

 

Read more here: 

Hancock Whitney Has Above-Average Upside, But It Requires Self-Improvement