Fifth Third Bancorp FITB is benefiting from robust revenue growth and solid liquidity. Acquisitions diversified the company's revenue sources, supporting its top-line growth. Its expansion strategy looks encouraging. Hence, it seems to be a wise idea to add the FITB stock to your portfolio now, given its solid fundamentals and decent growth prospects.
Shares of this Zacks Rank #2 (Buy) company have gained 9.4% over the past year compared with 16.3% growth of the industry.
Price Performance
Image Source: Zacks Investment Research
What Makes FITB Stock Worth Betting On
Earnings Growth: Fifth Third witnessed earnings growth of 11.1% in the past three to five years. In the next three to five years, the company is expected to witness earnings growth of 9.2%.
Also, FITB has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 4.13%. The Zacks Consensus Estimate for earnings indicates a 9.2% rise on a year-over-year basis in 2025 and 11.6% in 2025.
Focus on Growing Non-Interest Income: Fifth Third has focused on treasury management, and wealth and asset management business in the past few quarters to bolster its non-interest income, which is less volatile compared with spread income.
The company’s efforts to increase non-interest income through collaborations will support the metric in the upcoming period. In May 2024, in collaboration with Bottomline, Fifth Third launched Enhanced Payables — a new payment platform powered by the latter’s business payments network, Paymode-X.
Advancing its innovation in the money movement landscape, Fifth Third's embedded payments platform, Newline, entered a collaborative agreement with Trustly in September.
Through such collaborations, the bank anticipates commercial payments to be a $1-billion business in the next five years. This will eventually boost the company’s non-interest income growth over time. We expect non-interest income to rise 5% year over year in 2025.
Expansion Strategy: Fifth Third announced a significant expansion plan to open more than 200 retail branches in the next four years, with a focus on fast-growing Southeast markets. With this expansion strategy, FITB intends to enhance its customer experience through a combination of digital and physical infrastructure, fostering deeper banking relationships and driving sustainable growth.
The company intends to open 50 or more branches a year in the key Southeast regions by 2028, doubling its investment pace. In addition to entering 11 additional Metropolitan Statistical Areas , including two markets in Alabama, the Bank will finish building up its current markets. Fifth Third anticipates having 50% of its branches in the Midwest and 50% in the Southeast by the end of 2028.
With its focus on the Southeast region, FITB’s expansion strategy is a well-thought-out move that is expected to generate significant long-term benefits, including a potential increase in market share and revenues.
Solid Liquidity Position: Fifth Third has a strong liquidity position. As of Dec. 31, 2024, the company had a total debt (long-term debt and other short-term borrowings) of $18.8 billion. Out of the total debt, short-term borrowings were $4.5 billion. Total liquidity (cash and due from banks and other short-term investments) was $20.1 billion as of the same date.
Therefore, with a strong liquidity position and manageable debt levels, the company will be able to meet its debt obligations in the near term, even if the economic situation worsens.
Enhanced Capital Distribution Plan: As of Dec. 31, 2024, FITB’s common equity tier (CET) 1 ratio was 10.51%. This offers room for enhanced capital distribution plans by the company. In September 2024, it announced a 5.7% rise in the quarterly dividend to 37 cents per share. At present, the company has a dividend payout ratio of 44%.
Fifth Third also has a share repurchase plan in place. On June 18, 2019, the company’s board of directors authorized management to purchase 100 million shares of the company’s common stock through the open market or in any private party transactions, with no expiration date. As of Dec. 31, 2024, nearly 17 million shares remained available under the authorization. Such efforts will enhance shareholder value in the long term.
Other Finance Stocks to Consider
Some other top-ranked stocks are The Bank of New York Mellon BK and Northern Trust Corporation NTRS.
BK’s earnings estimates for 2025 have been revised upward to $6.96 per share in the past 30 days. Its shares have gained 50.5% over the past year. It currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NTRS’s 2025 earnings estimates have been revised upward to $8.25 per share in the past 30 days. Its shares have gained 22.3% over the past year. It currently sports a Zacks Rank of 1.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Fifth Third Bancorp (FITB): Free Stock Analysis Report
The Bank of New York Mellon Corporation (BK): Free Stock Analysis Report
Northern Trust Corporation (NTRS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
/Tesla%20Inc%20tesla%20by-%20Iv-olga%20via%20Shutterstock(1).jpg)
/Stickers%20with%20AMD%20Radeon%20and%20Nvidia%20GeForce%20RTX%20graphics%20on%20new%20laptop%20computer%20by%20Piotr%20Swat%20via%20Shutterstock.jpg)
