Here’s how much you’d have if you invested $1,000 in Fifth Third Bancorp a decade ago
How much a stock’s price changes over time is important to most investors, as price action can both affect your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is fear of missing out, or FOMO. This is especially true for tech giants and popular consumer-facing stocks.
What If You Invested in Fifth Third Bancorp (NASDAQ:) Ten Years Ago? It might not have been easy sticking with FITB all along, but if so, how much would your investment be worth today?
Fifth third overview of Bancorp’s business
With that in mind, let’s take a look at Fifth Third Bancorp’s key business drivers.
With $205 billion in assets as of June 30, 2021, Cincinnati-based Fifth Third Bancorp has 1,096 full-service banking centers in 11 states in the Midwest and Southeast United States. In September 2019, Fifth Third received approval from the Office of the Comptroller of the Currency to convert from an Ohio state-licensed bank to a national bank.
Fifth Third primarily classifies its operations into four reportable segments. First, Branch Banking offers deposit, loan and leasing products, and credit cards to individuals and small businesses. Next, the consumer lending business includes residential mortgages, automobiles, and other indirect lending businesses.
The company also has a commercial banking unit that provides financial services and products to large and mid-sized companies, governments and professional clients. The Wealth and Asset Management division offers investment alternatives to private individuals, companies and non-profit organizations. These consist of proprietary investment funds, securities brokerage and asset management services.
Finally, the General Corporate and Other segment includes the unallocated portion of the investment securities portfolio, securities gains and losses, non-core deposit funding, unallocated equity, unallocated provision costs via net charge-offs or benefit from the reduction in allowance for credit losses, agency and guarantee expense over actual losses or benefit from reductions in agency and warranty reserves, payment of preferred stock dividends, and additional activities.
In January 2021, Fifth Third acquired Hammond Hanlon Camp LLC. In 2019, the company completed the acquisition of MB Financial. In 2018, the company acquired Coker Capital, a healthcare M&A advisory firm. In 2017, it was acquired by RG McGraw Insurance Agency.
Notably, Fifth Third gave up its entire stake in all publicly traded companies. In March 2019, the company exchanged its remaining interest in Worldpay Holdings, LLC for interest in Worldpay, Inc. and subsequently sold its interest for a gain of $562 million. During March and April 2019, Fifth Third exchanged its Class B shares of GreenSky Holdings, LLC for Class A common shares of GreenSky, Inc. and subsequently sold all shares.
Assembling a successful investment portfolio requires a combination of research, patience, and a little risk. If you bought Fifth Third Bancorp stock a decade ago, you probably feel very good about your investment today.
According to our calculations, a $1,000 investment made in October 2011 would be worth $4,322.77 on October 4, 2021, or a gain of 332.28%, and this return excludes dividends but includes price increases.
Compare that to the S&P 500’s 285.09% rally and gold’s 4.41% return over the same period.
Looking ahead, analysts expect more upside potential for FITB.
Fifth Third shares have outperformed the industry they belong to over the past year. The company has an impressive earnings surprise record, having beaten the Zacks Consensus estimate in all of the last four quarters. The recovery of the US economy should bring decent credit growth to the company. The rising deposit balances and improving asset quality in the second quarter are expected to continue in the near term and support financial metrics. Supported by a solid liquidity position, the bank is less exposed to credit risk in the event of an economic downturn. Prudent capital deployment activities are positive. However, rising spending due to investments in store digitization initiatives and pressure on margins in the face of near-zero interest rates remain major concerns. The large exposure to commercial loans is also acting as a headwind.
The stock is up 13.37% over the past four weeks, and no earnings estimate is down over the past two months, compared to 7 higher for fiscal 2021. The consensus estimate is also up.
5 shares are doubled
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