Can Bank of Hawaii (BOH) Run Higher on Rising Earnings Estimates?

Investors might want to bet on Bank of Hawaii (BOH), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

Analysts' growing optimism on the earnings prospects of this bank holding company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Bank of Hawaii, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $1.02 per share, which is a change of +18.6% from the year-ago reported number.

Over the last 30 days, one estimate has moved higher for Bank of Hawaii compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 6.28%.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $4.16 per share, representing a year-over-year change of +17.85%.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, three estimates have moved up for Bank of Hawaii versus no negative revisions. This has pushed the consensus estimate 6.4% higher.

Favorable Zacks Rank

Thanks to promising estimate revisions, Bank of Hawaii currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Bank of Hawaii shares have added 13% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research