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Here's Why You Should Buy SunTrust (STI) Stock Right Now
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At a time when finance sector stocks are showing resilience and confronting the macro issues upfront, we thought of bringing up a stock from the sector that reflects strong fundamentals, upbeat outlook and solid long-term growth opportunity.
SunTrust Banks, Inc. (STI - Free Report) is one of the major regional banks, with a market capitalization of $21.7 billion. This Zacks Rank #2 (Buy) stock has been witnessing upward estimate revisions for 2016, indicating analysts’ optimism about its growth prospects. Over the last 60 days, the Zacks Consensus Estimate for 2016 has inched up nearly 1% to $3.53.
Further, SunTrust has a number of other aspects that make it an attractive investment option.
Revenue Strength: While SunTrust has been witnessing a decline in its top line over the last few years, the gradual economic recovery and increasing loan demand are expected to support revenue in the coming years. Notably, the company’s projected sales growth (F1/F0) of 6.1%, compared with the industry average of 3.7%, ensures improvement in revenues.
Earnings Growth: SunTrust has recorded earnings per share CAGR of 39.7% over the last five years (2011–2015). Further, the company’s long-term (3–5 years) estimated EPS growth rate of 5.9% promises rewards for investors in the long run.
Effective Expense Management: SunTrust’s cost-saving initiatives have started yielding results, with non-interest expenses declining at a 3-year (2013–2015) of CAGR of 5.9%. The company remains undeterred in its efforts to improve efficiency and targets an efficiency ratio below 60% over the longer term.
Strong Leverage: SunTrust’s debt/equity ratio stands at 0.53, compared with the industry average of 0.93, indicating a relatively lower debt burden. It indicates the financial stability of the company even in adverse economic conditions.
Valuation Looks Reasonable: SunTrust has a Value Style Score of ‘B’. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’, when combined with Zacks Rank #1 or #2, offer the best upside potential.
Rising Share Price: Over the last one year, SunTrust’s share price has witnessed an uptrend, improving approximately 17%. Further, the stock has Momentum Style Score of ‘B.’
Other finance stocks worth a look include Comerica Incorporated (CMA - Free Report) , Synovus Financial Corporation (SNV - Free Report) and BlackRock, Inc. (BLK - Free Report) . All three stocks sport the same Zacks Rank as SunTrust.
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Here's Why You Should Buy SunTrust (STI) Stock Right Now
At a time when finance sector stocks are showing resilience and confronting the macro issues upfront, we thought of bringing up a stock from the sector that reflects strong fundamentals, upbeat outlook and solid long-term growth opportunity.
SunTrust Banks, Inc. (STI - Free Report) is one of the major regional banks, with a market capitalization of $21.7 billion. This Zacks Rank #2 (Buy) stock has been witnessing upward estimate revisions for 2016, indicating analysts’ optimism about its growth prospects. Over the last 60 days, the Zacks Consensus Estimate for 2016 has inched up nearly 1% to $3.53.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, SunTrust has an impressive earnings surprise history. You can see that in the chart below:
SUNTRUST BKS Price and EPS Surprise
SUNTRUST BKS Price and EPS Surprise | SUNTRUST BKS Quote
Further, SunTrust has a number of other aspects that make it an attractive investment option.
Revenue Strength: While SunTrust has been witnessing a decline in its top line over the last few years, the gradual economic recovery and increasing loan demand are expected to support revenue in the coming years. Notably, the company’s projected sales growth (F1/F0) of 6.1%, compared with the industry average of 3.7%, ensures improvement in revenues.
Earnings Growth: SunTrust has recorded earnings per share CAGR of 39.7% over the last five years (2011–2015). Further, the company’s long-term (3–5 years) estimated EPS growth rate of 5.9% promises rewards for investors in the long run.
Effective Expense Management: SunTrust’s cost-saving initiatives have started yielding results, with non-interest expenses declining at a 3-year (2013–2015) of CAGR of 5.9%. The company remains undeterred in its efforts to improve efficiency and targets an efficiency ratio below 60% over the longer term.
Strong Leverage: SunTrust’s debt/equity ratio stands at 0.53, compared with the industry average of 0.93, indicating a relatively lower debt burden. It indicates the financial stability of the company even in adverse economic conditions.
Valuation Looks Reasonable: SunTrust has a Value Style Score of ‘B’. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’, when combined with Zacks Rank #1 or #2, offer the best upside potential.
Rising Share Price: Over the last one year, SunTrust’s share price has witnessed an uptrend, improving approximately 17%. Further, the stock has Momentum Style Score of ‘B.’
SUNTRUST BKS Price
SUNTRUST BKS Price | SUNTRUST BKS Quote
Stocks to Consider
Other finance stocks worth a look include Comerica Incorporated (CMA - Free Report) , Synovus Financial Corporation (SNV - Free Report) and BlackRock, Inc. (BLK - Free Report) . All three stocks sport the same Zacks Rank as SunTrust.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>