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Here's How Much You'd Have If You Invested $1000 in Fifth Third Bancorp a Decade Ago

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How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.

Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.

What if you'd invested in Fifth Third Bancorp (FITB) ten years ago? It may not have been easy to hold on to FITB for all that time, but if you did, how much would your investment be worth today?

Fifth Third Bancorp's Business In-Depth

With that in mind, let's take a look at Fifth Third Bancorp's main business drivers.

With assets of $205 billion as of Jun 30, 2021, Cincinnati-based Fifth Third Bancorp has 1,096 full-service banking centers in 11 states throughout the Midwestern and Southeastern regions of the United States. In September 2019, Fifth Third received the Office of the Comptroller of the Currency's approval to convert from an Ohio state-chartered bank to a national bank.

Fifth Third classifies its operations into mainly four reportable segments. Firstly, Branch Banking provides deposit, loan and lease products, and credit cards to individuals and small businesses. Next, Consumer Lending includes residential mortgage, automobile and other indirect lending activities.

Also, the company has a Commercial Banking unit that provides financial services and products to large and middle-market businesses, governments and professional customers. The Wealth and Asset Management division offers investment alternatives to individuals, companies and non-profit organizations. These consist of proprietary mutual funds, securities brokerage and asset management services.

Lastly, the General Corporate and Other segment includes unallocated portion of investment securities portfolio, securities gains and losses, non-core deposit funding, unassigned equity, unallocated provision expense above net charge-offs or benefit from reduction of allowance for loan losses, representation and warranty expense above actual losses or benefit from reduction of representation 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, it acquired Coker Capital, a healthcare Merger & Acquisition advisory firm. In 2017, it acquired R.G. McGraw Insurance Agency.

Notably, Fifth Third has exited its entire stake in all publicly-traded companies. In March 2019, the company exchanged its remaining shares of Worldpay Holdings, LLC for shares of Worldpay, Inc., and subsequently sold its shares, recording a gain of $562 million. During March and April 2019, Fifth Third exchanged its Class B units of GreenSky Holdings, LLC for Class A common stock of GreenSky, Inc., and subsequently sold all of the stock.

Bottom Line

Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Fifth Third Bancorp, if you bought shares a decade ago, you're likely feeling really good about your investment today.

According to our calculations, a $1000 investment made in October 2011 would be worth $4,322.77, or a gain of 332.28%, as of October 4, 2021, and this return excludes dividends but includes price increases.

Compare this to the S&P 500's rally of 285.09% and gold's return of 4.41% over the same time frame.

Going forward, analysts are expecting more upside for FITB.

Shares of Fifth Third have outperformed the industry it belongs to in the past year. The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in all of the trailing four quarters. The recovery in the U.S economy is likely to drive decent loan growth for the company. Rising deposit balances and improving asset quality in the second quarter are expected to continue in the near term as well, supporting its financials. With support from a solid liquidity position, the bank is less exposed to credit risk in case of any economic downturn. Prudent capital-deployment activities are positives. However, rising expenses due to investments in branch digitization initiatives and margin pressure amid near-zero interest rates remain major concerns. Also, major exposure to commercial loans acts as a headwind.

The stock is up 13.37% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 7 higher, for fiscal 2021. The consensus estimate has moved up as well.
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