Here's Why I Think Zions Bancorporation National Association (NASDAQ:ZION) Is An Interesting Stock

By
Simply Wall St
Published
November 29, 2021
NasdaqGS:ZION
Source: Shutterstock

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

So if you're like me, you might be more interested in profitable, growing companies, like Zions Bancorporation National Association (NASDAQ:ZION). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

See our latest analysis for Zions Bancorporation National Association

How Fast Is Zions Bancorporation National Association Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. As a tree reaches steadily for the sky, Zions Bancorporation National Association's EPS has grown 25% each year, compound, over three years. If the company can sustain that sort of growth, we'd expect shareholders to come away winners.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. I note that Zions Bancorporation National Association's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While we note Zions Bancorporation National Association's EBIT margins were flat over the last year, revenue grew by a solid 41% to US$3.3b. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

earnings-and-revenue-history
NasdaqGS:ZION Earnings and Revenue History November 30th 2021

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for Zions Bancorporation National Association's future profits.

Are Zions Bancorporation National Association Insiders Aligned With All Shareholders?

Since Zions Bancorporation National Association has a market capitalization of US$10b, we wouldn't expect insiders to hold a large percentage of shares. But we are reassured by the fact they have invested in the company. Notably, they have an enormous stake in the company, worth US$148m. I would find that kind of skin in the game quite encouraging, if I owned shares, since it would ensure that the leaders of the company would also experience my success, or failure, with the stock.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Well, based on the CEO pay, I'd say they are indeed. I discovered that the median total compensation for the CEOs of companies like Zions Bancorporation National Association, with market caps over US$8.0b, is about US$11m.

The CEO of Zions Bancorporation National Association only received US$4.8m in total compensation for the year ending . That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Does Zions Bancorporation National Association Deserve A Spot On Your Watchlist?

For growth investors like me, Zions Bancorporation National Association's raw rate of earnings growth is a beacon in the night. If you need more convincing beyond that EPS growth rate, don't forget about the reasonable remuneration and the high insider ownership. This may only be a fast rundown, but the takeaway for me is that Zions Bancorporation National Association is worth keeping an eye on. Before you take the next step you should know about the 2 warning signs for Zions Bancorporation National Association (1 can't be ignored!) that we have uncovered.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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