Fed’s Powell opens door to potential rate cuts at Jackson Hole
On Wednesday, Hilltop Holdings (NYSE:HTH), a financial services company with a market capitalization of $1.97 billion, received an upgrade in stock rating by analysts at Raymond (NSE:RYMD) James, moving from Underperform to Market Perform. The change in rating comes as a response to the evolving economic landscape that may benefit the company’s mortgage and securities business. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s prospects.
The analysts at Raymond James noted that the potential positive tailwinds for Hilltop Holdings are primarily due to lower rates and increased bond market volatility. These conditions are seen as favorable for the company’s fee-heavy business mix, which is largely comprised of mortgage and securities businesses. InvestingPro analysis indicates the company is currently trading slightly below its Fair Value, with a P/E ratio of 17.67x and an attractive dividend yield of 2.37%.
Previously, in December, the firm had downgraded Hilltop Holdings over concerns related to its business mix, which is approximately 65% fee-based as of the fourth quarter of 2024. The concern was based on the impact of a higher-for-longer rate environment on the company’s large mortgage and securities businesses. However, the company’s shares have since outperformed, with a year-to-date increase of 6.65%, compared to a 6.2% decline for the banking sector. Investors looking for deeper insights can access comprehensive analysis and 8 additional ProTips through InvestingPro’s detailed research report.
The analysts acknowledged that they did not anticipate the macroeconomic impact that tariffs, inflationary concerns, and uncertainty on the economic outlook would have on driving lower rates, which in turn benefits the company’s fee-based businesses. With the new developments, Raymond James now views the risk-reward balance for Hilltop Holdings as neutral. Investors should note that the company’s next earnings report is scheduled for April 17, 2025, which could provide further clarity on its performance trajectory.
In other recent news, Hilltop Holdings Inc . reported a strong performance for the fourth quarter of 2024, significantly surpassing earnings expectations. The company achieved an earnings per share (EPS) of $0.55, exceeding the forecasted $0.30, and reported revenue of $301.07 million, surpassing the anticipated $289.76 million. The company’s diversified business model, including contributions from PlainsCapital Bank and Hilltop Securities, played a crucial role in this achievement. In another development, Hilltop Holdings completed the sale of its portfolio company, Moser Acquisition, to Atlas (NYSE:ATCO) Energy Solutions Inc., though the financial terms of the deal were not disclosed. This transaction aligns with Hilltop Holdings’ broader business strategy and is expected to impact its financial position. The company also announced plans for a share repurchase program, authorized for $100 million, indicating a proactive approach to capital management. These developments come amidst a backdrop of fluctuating interest rates and a challenging mortgage market, which the company has navigated through effective cost management and operational efficiencies. Analysts from firms like Raymond James and Piper Sandler have engaged with Hilltop Holdings’ executives to discuss future strategies and financial outlooks, highlighting the company’s focus on maintaining asset sensitivity and managing deposit costs effectively.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.