Cullen/Frost Bankers, Inc. (CFR) Downgraded to “Sell” at Zacks Investment Research

Zacks Investment Research downgraded shares of Cullen/Frost Bankers, Inc. (NYSE:CFR) from a hold rating to a sell rating in a research note released on Tuesday, October 17th.

According to Zacks, “Shares of Cullen/Frost have underperformed the industry over the last six months. Estimates have declined lately ahead of the company’s Q3 earnings release. However, the company boasts an impressive earnings surprise history. It has surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters. With a rising interest rate environment and improving non-interest bearing deposits, the company's net interest income and net interest margin is expected to grow. However, rising costs stemming mainly from expanding franchise are likely to deter bottom-line growth to some extent. Also, the company’s risky loan portfolio keeps us apprehensive.”

A number of other brokerages have also weighed in on CFR. BidaskClub upgraded shares of Cullen/Frost Bankers from a sell rating to a hold rating in a research report on Wednesday, July 5th. Barclays PLC raised their price target on shares of Cullen/Frost Bankers from $97.00 to $100.00 and gave the company an equal weight rating in a research note on Friday, July 28th. Morgan Stanley reaffirmed an equal weight rating and set a $93.00 price target (up previously from $90.00) on shares of Cullen/Frost Bankers in a research note on Thursday, July 6th. Citigroup Inc. downgraded shares of Cullen/Frost Bankers to an underperform rating in a research note on Thursday, August 10th. They noted that the move was a valuation call. Finally, Raymond James Financial, Inc. reaffirmed a market perform rating on shares of Cullen/Frost Bankers in a research note on Tuesday, July 4th. One equities research analyst has rated the stock with a sell rating, twelve have assigned a hold rating and three have assigned a buy rating to the company. The stock currently has an average rating of Hold and an average target price of $100.46.

Shares of Cullen/Frost Bankers (NYSE CFR) traded down $0.06 during trading hours on Tuesday, hitting $97.80. 210,462 shares of the company’s stock were exchanged, compared to its average volume of 427,584. Cullen/Frost Bankers has a 1 year low of $72.96 and a 1 year high of $103.37. The firm has a market cap of $6,181.28, a price-to-earnings ratio of 18.60, a PEG ratio of 1.93 and a beta of 1.35. The company has a debt-to-equity ratio of 0.08, a quick ratio of 0.65 and a current ratio of 0.65.

Cullen/Frost Bankers (NYSE:CFR) last posted its quarterly earnings results on Thursday, October 26th. The bank reported $1.41 earnings per share (EPS) for the quarter, topping the Thomson Reuters’ consensus estimate of $1.31 by $0.10. Cullen/Frost Bankers had a net margin of 28.86% and a return on equity of 11.64%. The business had revenue of $300.83 million for the quarter, compared to analyst estimates of $329.62 million. During the same quarter last year, the business posted $1.24 EPS. analysts forecast that Cullen/Frost Bankers will post 5.35 earnings per share for the current fiscal year.

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The firm also recently declared a quarterly dividend, which will be paid on Friday, December 15th. Stockholders of record on Thursday, November 30th will be given a $0.57 dividend. This represents a $2.28 annualized dividend and a dividend yield of 2.33%. The ex-dividend date of this dividend is Wednesday, November 29th. Cullen/Frost Bankers’s dividend payout ratio (DPR) is currently 43.35%.

Cullen/Frost Bankers announced that its board has authorized a share buyback program on Thursday, October 26th that permits the company to buyback $150.00 million in outstanding shares. This buyback authorization permits the bank to reacquire up to 2.4% of its shares through open market purchases. Shares buyback programs are often a sign that the company’s management believes its stock is undervalued.

In related news, insider Bobby Berman sold 41,760 shares of the company’s stock in a transaction that occurred on Friday, October 27th. The shares were sold at an average price of $100.53, for a total transaction of $4,198,132.80. Following the sale, the insider now owns 38,596 shares of the company’s stock, valued at approximately $3,880,055.88. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Corporate insiders own 5.15% of the company’s stock.

A number of hedge funds have recently added to or reduced their stakes in the business. Rhumbline Advisers grew its stake in Cullen/Frost Bankers by 9.8% in the 3rd quarter. Rhumbline Advisers now owns 112,504 shares of the bank’s stock worth $10,679,000 after buying an additional 10,018 shares in the last quarter. Tower Bridge Advisors grew its stake in Cullen/Frost Bankers by 3.1% in the 3rd quarter. Tower Bridge Advisors now owns 44,670 shares of the bank’s stock worth $4,240,000 after buying an additional 1,325 shares in the last quarter. Retirement Systems of Alabama grew its stake in Cullen/Frost Bankers by 2.8% in the 3rd quarter. Retirement Systems of Alabama now owns 75,416 shares of the bank’s stock worth $7,158,000 after buying an additional 2,043 shares in the last quarter. Sei Investments Co. grew its stake in Cullen/Frost Bankers by 6.6% in the 3rd quarter. Sei Investments Co. now owns 88,791 shares of the bank’s stock worth $8,427,000 after buying an additional 5,461 shares in the last quarter. Finally, FDx Advisors Inc. grew its stake in Cullen/Frost Bankers by 23.8% in the 3rd quarter. FDx Advisors Inc. now owns 4,132 shares of the bank’s stock worth $392,000 after buying an additional 795 shares in the last quarter. 81.98% of the stock is owned by institutional investors and hedge funds.

About Cullen/Frost Bankers

Cullen/Frost Bankers, Inc is a financial holding company and a bank holding company. The Company, through its subsidiaries, provides a range of products and services throughout Texas markets. The Company’s segments include Banking, Frost Wealth Advisors and Non-Banks. The Banking segment includes both commercial and consumer banking services, and Frost Insurance Agency.

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