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4 Reasons to Add Synovus (SNV) Stock to Your Portfolio Now
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Adding Synovus Financial Corp. (SNV - Free Report) stock to your portfolio seems to be a wise idea now. Supported by strong fundamentals, the company is well poised for growth.
The Zacks Consensus Estimate for SNV’s current-year earnings has been revised marginally upward over the past 30 days, indicating that analysts are optimistic regarding its earnings growth potential. SNV currently carries a Zacks Rank #2 (Buy).
Over the past six months, the stock has risen 24.3% compared with the industry’s growth of 19.6%.
Image Source: Zacks Investment Research
Let’s delve into the other factors that make SNV an attractive investment option now.
Balance Sheet Strength: Synovus’ organic growth has been supported by its relationship banking model. Loans and deposits witnessed a compound annual growth rate of 5.5% and 8.8%, respectively, in the last three years (2019-2022).
Its deposits are well diversified across industries and geographies in Southeast regions. Also, the company’s floating-rate loan portfolio is well positioned in the current high interest-rate regime. For 2023, management expects total loan balances to be stable to up 2%, while core deposits (excluding brokered accounts) growth is estimated in the 1-4% band.
Solid Capital Distributions: Synovus has an impressive capital distribution plan. In March 2023, the company announced a 12% sequential hike in its quarterly dividend to 38 cents per share. Also, it has share repurchase authorization worth $300 million, which was announced in January 2023. However, no buybacks were executed in the first nine months of 2023 due to uncertainty in the regulatory environment.
Nonetheless, for 2023, management estimates the common equity tier 1 ratio to be more than 10%. Given its strong balance sheet and decent earnings strength, the continuation of its sustainable capital distribution activities is expected to drive investors’ confidence in the stock.
Stock Looks Undervalued: The stock seems undervalued when compared with the broader industry. Its current price/earnings, price/cash flow and price/sales ratios are below the industry averages. The stock has a Value Score of A. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Superior Return on Equity (ROE): Synovus’ ROE of 17.48% is higher than the industry average of 11.30%. This highlights the company’s commendable position over its peers in using shareholders’ funds.
Earnings estimates for ASB have increased marginally for 2023 over the past 30 days to $2.27. The company’s shares have gained 31.9% over the past six months.
Earnings estimates for EBMT have remained unchanged for 2023 at $1.35 over the past 60 days. In the past six-month period, EBMT’s shares have improved 21.5%.
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4 Reasons to Add Synovus (SNV) Stock to Your Portfolio Now
Adding Synovus Financial Corp. (SNV - Free Report) stock to your portfolio seems to be a wise idea now. Supported by strong fundamentals, the company is well poised for growth.
The Zacks Consensus Estimate for SNV’s current-year earnings has been revised marginally upward over the past 30 days, indicating that analysts are optimistic regarding its earnings growth potential. SNV currently carries a Zacks Rank #2 (Buy).
Over the past six months, the stock has risen 24.3% compared with the industry’s growth of 19.6%.
Image Source: Zacks Investment Research
Let’s delve into the other factors that make SNV an attractive investment option now.
Balance Sheet Strength: Synovus’ organic growth has been supported by its relationship banking model. Loans and deposits witnessed a compound annual growth rate of 5.5% and 8.8%, respectively, in the last three years (2019-2022).
Its deposits are well diversified across industries and geographies in Southeast regions. Also, the company’s floating-rate loan portfolio is well positioned in the current high interest-rate regime. For 2023, management expects total loan balances to be stable to up 2%, while core deposits (excluding brokered accounts) growth is estimated in the 1-4% band.
Solid Capital Distributions: Synovus has an impressive capital distribution plan. In March 2023, the company announced a 12% sequential hike in its quarterly dividend to 38 cents per share. Also, it has share repurchase authorization worth $300 million, which was announced in January 2023. However, no buybacks were executed in the first nine months of 2023 due to uncertainty in the regulatory environment.
Nonetheless, for 2023, management estimates the common equity tier 1 ratio to be more than 10%. Given its strong balance sheet and decent earnings strength, the continuation of its sustainable capital distribution activities is expected to drive investors’ confidence in the stock.
Stock Looks Undervalued: The stock seems undervalued when compared with the broader industry. Its current price/earnings, price/cash flow and price/sales ratios are below the industry averages. The stock has a Value Score of A. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Superior Return on Equity (ROE): Synovus’ ROE of 17.48% is higher than the industry average of 11.30%. This highlights the company’s commendable position over its peers in using shareholders’ funds.
Other Stocks Worth Considering
A couple of other top-ranked stocks from the banking space are Associated Banc-Corp (ASB - Free Report) and Eagle Bancorp Montana, Inc. (EBMT - Free Report) . Each stock currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for ASB have increased marginally for 2023 over the past 30 days to $2.27. The company’s shares have gained 31.9% over the past six months.
Earnings estimates for EBMT have remained unchanged for 2023 at $1.35 over the past 60 days. In the past six-month period, EBMT’s shares have improved 21.5%.