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Why Should You Add First Horizon (FHN) to Your Portfolio?
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Amid the recent global turmoil, most of the stocks are trending lower because of the anxiety among investors. We believe this creates a buying opportunity for long-term investments.
As the U.S. banks are concerned, these have been battling with regulatory and litigation issues, leading to elevated legal and compliance costs. However, a sharper focus on reducing needless expenses by reorganizing business and improving revenues is boosting the bottom line and making the growth path steadier for the banks.
Moreover, further interest rate hike is expected to bring more stability to top-line generation. Therefore, it’s a good idea to add stocks with strong fundamentals and long-term growth opportunities to your portfolio at the current level. First Horizon National Corp. (FHN - Free Report) is one such stock.
With $27 billion in assets as of Mar 31, 2016, First Horizon’s strengths include organic and inorganic growth strategies, cost control and steady capital deployment activities.
Why Is It a Solid Choice?
Prudent Expense Management: First Horizon’s cost-containment measures have driven bottom-line improvement in the past several quarters. This led to a fall in non-interest expenses at a 3-year CAGR of 22% (2012–2014). Though expenses escalated year over year in 2015, it declined in first-quarter 2016 as the company remained committed toward expense management, through process improvement, branch network optimization and other efficiencies.
Strong Leverage: First Horizon’s debt/equity ratio stands at 0.52 compared to the S&P 500 average of 0.66, indicating relatively lower debt burden. It indicates the financial stability of the company even in adverse economic conditions.
Capital Deployment: First Horizon’s capital deployment activities are impressive. Notably, in Jan 2016, the company hiked its dividend by 17% and expanded its share repurchase program. The extended program provides the company with $150 million of a new plan, or about $210 million in currently available authority which will expire in Jan 2018.
Favorable Zacks Rank: First Horizon currently carries a Zacks Rank #2 (Buy). For 2016 and 2017, the Zacks Consensus Estimate remained stable at 91 cents and $1.04 per share, respectively.
The Bottom Line
Dual focus on restructuring and cost control is likely boost the company’s profitability going forward. Also, asset base remains stabilized. Further, the company’s efforts to strengthen its core Tennessee banking franchise bodes well for the long term.
Other Stocks to Consider
Some other finance stocks worth considering are Park Sterling Corporation , Community Trust Bancorp Inc. (CTBI - Free Report) and Pinnacle Financial Partners Inc. (PNFP - Free Report) . All the three companies hold a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Why Should You Add First Horizon (FHN) to Your Portfolio?
Amid the recent global turmoil, most of the stocks are trending lower because of the anxiety among investors. We believe this creates a buying opportunity for long-term investments.
As the U.S. banks are concerned, these have been battling with regulatory and litigation issues, leading to elevated legal and compliance costs. However, a sharper focus on reducing needless expenses by reorganizing business and improving revenues is boosting the bottom line and making the growth path steadier for the banks.
Moreover, further interest rate hike is expected to bring more stability to top-line generation. Therefore, it’s a good idea to add stocks with strong fundamentals and long-term growth opportunities to your portfolio at the current level. First Horizon National Corp. (FHN - Free Report) is one such stock.
With $27 billion in assets as of Mar 31, 2016, First Horizon’s strengths include organic and inorganic growth strategies, cost control and steady capital deployment activities.
Why Is It a Solid Choice?
Prudent Expense Management: First Horizon’s cost-containment measures have driven bottom-line improvement in the past several quarters. This led to a fall in non-interest expenses at a 3-year CAGR of 22% (2012–2014). Though expenses escalated year over year in 2015, it declined in first-quarter 2016 as the company remained committed toward expense management, through process improvement, branch network optimization and other efficiencies.
Strong Leverage: First Horizon’s debt/equity ratio stands at 0.52 compared to the S&P 500 average of 0.66, indicating relatively lower debt burden. It indicates the financial stability of the company even in adverse economic conditions.
Capital Deployment: First Horizon’s capital deployment activities are impressive. Notably, in Jan 2016, the company hiked its dividend by 17% and expanded its share repurchase program. The extended program provides the company with $150 million of a new plan, or about $210 million in currently available authority which will expire in Jan 2018.
Favorable Zacks Rank: First Horizon currently carries a Zacks Rank #2 (Buy). For 2016 and 2017, the Zacks Consensus Estimate remained stable at 91 cents and $1.04 per share, respectively.
The Bottom Line
Dual focus on restructuring and cost control is likely boost the company’s profitability going forward. Also, asset base remains stabilized. Further, the company’s efforts to strengthen its core Tennessee banking franchise bodes well for the long term.
Other Stocks to Consider
Some other finance stocks worth considering are Park Sterling Corporation , Community Trust Bancorp Inc. (CTBI - Free Report) and Pinnacle Financial Partners Inc. (PNFP - Free Report) . All the three companies hold a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>