Wintrust Financial outperforms industry amid high interest rates

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Wintrust Financial outperforms industry amid high interest rates
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Wintrust Financial (NASDAQ: WTFC ) Corporation ( NASDAQ :WTFC), a robust lender, has demonstrated resilience in the face of high interest rates and waning loan demand that currently plague the banking industry. The company's solid loan and deposit balances, elevated interest rates, and a strong balance sheet have positioned it for continued growth.

Over the past week, WTFC's shares observed a 9.2% surge, surpassing the industry average increase of 4%. This growth trend is anticipated to continue in the near term, with earnings projected to rise by 24.3% this year. The company has achieved an earnings growth of 10.8% over the past three to five years, exceeding the industry average of 10.3%.

Analysts have shown confidence in WTFC's future earnings growth. In the past month, the Zacks Consensus Estimate for the company's earnings has been revised upward by 1.1% for both 2023 and 2024. Presently, WTFC holds a Zacks Rank #2 (Buy).

The firm's net revenues have also shown strength, marking a compound annual growth rate (CAGR) of 11.2% over the five years ending in 2022. This growth was driven by strong loan and deposit balances and initiatives to enhance fee income. High interest rates since 2022 have further contributed positively to Wintrust's top line.

In April, Wintrust expanded its portfolio by acquiring Rothschild & Co Asset Management US Inc. and Rothschild & Co Risk Based Investments LLC from Rothschild & Co North America Inc., adding approximately $12.6 million in assets.

The company's revenues are expected to maintain their upward trajectory due to healthy loan demand and an increase in fee income. However, rising funding costs may put pressure on Wintrust's financials. The top line is projected to grow 15% in 2023 and 1.1% in the following year.

Wintrust has a consistent record of capital distributions, paying regular quarterly dividends. Over the last five years, the company has increased dividends five times, resulting in a payout growth of 13.87% over this period. Currently, WTFC's payout ratio is 17% of earnings, which seems sustainable given the firm's robust balance sheet.

WTFC's stock holds a Value Score of A. Research suggests that stocks with a Value Score of A or B, coupled with a Zacks Rank #1 (Strong Buy) or 2, are likely to offer the best potential for upside growth.

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