Zacks Investment Research | Jan 03, 2019 08:58PM ET
It seems to be a wise decision to add SunTrust Banks, Inc. (NYSE:STI) stock to your portfolio now, given the company’s efforts to improve efficiency and enhance revenue growth through several initiatives. Also, its organic growth, aided by rising loans, as well as higher interest rates, bode well for the future.
Also, SunTrust’s encouraging capital-deployment activities reflect a strong balance sheet position. Further, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in all the trailing four quarters.
The company’s Zacks Consensus Estimate for 2019 earnings has remained unrevised over the last 60 days. The stock currently sports a Zacks Rank #2 (Buy).
In the past year, the stock has lost around 21.2% compared with the 18.7% decline of the industry .
With $211.3 billion in assets as of Sep 30, 2018, SunTrust has a number of other aspects that make it an attractive investment option.
5 Reasons Why SunTrust is a Must Buy
Earnings Strength: SunTrust witnessed historical (3-5 years) earnings per share growth of 11.1% compared with 9% growth recorded by the industry. In addition, the company’s estimated long-term EPS growth rate of 10.82% promises rewards for investors. Further, the company recorded a positive earnings surprise of 9.39% in the trailing four quarters.
Revenue Growth: SunTrust’s revenues have been supported by rising rate environment. Net interest margin (NIM) improved from 2.91% in 2015 to 3.00% in 2016 and further to 3.14% in 2017. Net interest income (NII) witnessed a four-year CAGR of 5.2% (2014-2017). Both NIM and NII witnessed uptrend in the first nine months of 2018 as well. Further, the rise in loan demand is expected to support top-line growth in the future. Revenues are expected to increase 3.7% in 2019.
Effective Expense Management: SunTrust’s cost-saving initiatives yielded results, with non-interest expenses declining at a six-year (2012-2017) CAGR of 1.7%, mainly driven by branch consolidation efforts. However, expenses flared up in 2017 and in 2016 (in sync with its plan to enhance revenue growth).
Leverage: SunTrust’s debt/equity ratio is pegged at 0.65 against the industry average of 0.94, reflecting lower debt burden compared with the industry. It highlights the company’s sound financial flexibility.
Stock Looks Undervalued: The stock currently has a Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.