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Why First Horizon (FHN) is a Must Buy for Investors Now?
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With focus on positive operating leverage and sturdy balance-sheet growth across multiple areas, First Horizon National Corporation (FHN - Free Report) appears a solid bet now. The company’s restructuring activities and expansion mode are expected to yield positive results for the stock.
Though the U.S. banks have been battling with regulatory and litigation issues, leading to elevated legal and compliance costs; a sharper focus on reducing needless expenses by reorganizing business and improving revenues is boosting the bottom line. This also paves a steadier growth path for the banks.
Moreover, the recent interest rate hike is likely 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 is one such stock.
With $28.4 billion in assets as of Sep 30, 2016, First Horizon’s strengths include organic and inorganic growth strategies, cost control and steady capital deployment activities.
Why is First Horizon an Attractive Pick?
Prudent Expense Management: First Horizon’s cost-containment measures have supported bottom-line improvement for the past several quarters. This led to a fall in non-interest expenses at a three-year CAGR of 22% (2012–2014). Though expenses escalated year over year in 2015; the same declined in the first nine months of 2016, as the company remained committed toward expense management, through process improvement, branch network optimization and other efficiencies. Notably, management seeks to reduce 15–17 branches in 2016, which is expected to result in annualized saving of $4–$6 million of expenses.
Strategic Moves: First Horizon has executed several strategic repositioning efforts to improve long-term profitability. Reinforcing its restaurant franchise finance business, in Sep 2016, the company acquired the restaurant franchise loans from GE Capital, worth $535 million. Management remains optimistic about the prospects of this business, moving ahead. Further, in Oct 2016, the company entered into an agreement to acquire Houston-based financial company – Coastal Securities – for $160 million in cash. The deal is estimated to be immediately accretive to First Horizon’s earnings per share, return on tangible common equity and return on assets. Also, last year, the company fortified its North Carolina footprint, with the acquisition of TrustAtlantic Financial Corp.
Strong Leverage: First Horizon’s debt/equity ratio is valued at 0.40 compared to the S&P 500 average of 0.69, indicating relatively lower debt burden. It highlights 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 flaunts a Zacks Rank #1 (Strong Buy). For 2016 and 2017, the Zacks Consensus Estimate increased 2.1% and 3.8%, to 96 cents and $1.09 per share, respectively, over the last 90 days.
Share Price Movement: First Horizon’s shares have gained 39.5% year to date, compared with the 42.9% growth in the Zacks categorized Southeast Banks industry.
Bottom Line
Dual focus on restructuring and cost control is likely to boost the company’s profitability, going forward. Also, asset base remains stabilized. Moreover, the company’s efforts to strengthen its core Tennessee banking franchise bode well for the long term. Additionally, the recent interest rate hike by Fed is likely to ease the pressure on margin, to some extent.
Stocks to Consider
Some better-ranked stocks in the finance space include The Goldman Sachs Group, Inc. (GS - Free Report) , Zions Bancorporation (ZION - Free Report) and Comerica Incorporated (CMA - Free Report) .
Goldman witnessed an upward earnings estimate revision of 2.2% for the current year, over the past 30 days. Its share price has risen 33.5%, year to date. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica also boasts a Zacks Rank #1. Over the past 30 days, its Zacks Consensus Estimate moved slightly up, for the current year. Its share price has increased 64.1%, year to date.
Zions carries a Zacks Rank #2 (Buy). It recorded an upward earnings estimate revision of 3.8% for the current year, over the past 90 days. Year to date, its share price is up 58.5%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Why First Horizon (FHN) is a Must Buy for Investors Now?
With focus on positive operating leverage and sturdy balance-sheet growth across multiple areas, First Horizon National Corporation (FHN - Free Report) appears a solid bet now. The company’s restructuring activities and expansion mode are expected to yield positive results for the stock.
Though the U.S. banks have been battling with regulatory and litigation issues, leading to elevated legal and compliance costs; a sharper focus on reducing needless expenses by reorganizing business and improving revenues is boosting the bottom line. This also paves a steadier growth path for the banks.
Moreover, the recent interest rate hike is likely 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 is one such stock.
With $28.4 billion in assets as of Sep 30, 2016, First Horizon’s strengths include organic and inorganic growth strategies, cost control and steady capital deployment activities.
Why is First Horizon an Attractive Pick?
Prudent Expense Management: First Horizon’s cost-containment measures have supported bottom-line improvement for the past several quarters. This led to a fall in non-interest expenses at a three-year CAGR of 22% (2012–2014). Though expenses escalated year over year in 2015; the same declined in the first nine months of 2016, as the company remained committed toward expense management, through process improvement, branch network optimization and other efficiencies. Notably, management seeks to reduce 15–17 branches in 2016, which is expected to result in annualized saving of $4–$6 million of expenses.
Strategic Moves: First Horizon has executed several strategic repositioning efforts to improve long-term profitability. Reinforcing its restaurant franchise finance business, in Sep 2016, the company acquired the restaurant franchise loans from GE Capital, worth $535 million. Management remains optimistic about the prospects of this business, moving ahead. Further, in Oct 2016, the company entered into an agreement to acquire Houston-based financial company – Coastal Securities – for $160 million in cash. The deal is estimated to be immediately accretive to First Horizon’s earnings per share, return on tangible common equity and return on assets. Also, last year, the company fortified its North Carolina footprint, with the acquisition of TrustAtlantic Financial Corp.
Strong Leverage: First Horizon’s debt/equity ratio is valued at 0.40 compared to the S&P 500 average of 0.69, indicating relatively lower debt burden. It highlights 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 flaunts a Zacks Rank #1 (Strong Buy). For 2016 and 2017, the Zacks Consensus Estimate increased 2.1% and 3.8%, to 96 cents and $1.09 per share, respectively, over the last 90 days.
Share Price Movement: First Horizon’s shares have gained 39.5% year to date, compared with the 42.9% growth in the Zacks categorized Southeast Banks industry.
Bottom Line
Dual focus on restructuring and cost control is likely to boost the company’s profitability, going forward. Also, asset base remains stabilized. Moreover, the company’s efforts to strengthen its core Tennessee banking franchise bode well for the long term. Additionally, the recent interest rate hike by Fed is likely to ease the pressure on margin, to some extent.
Stocks to Consider
Some better-ranked stocks in the finance space include The Goldman Sachs Group, Inc. (GS - Free Report) , Zions Bancorporation (ZION - Free Report) and Comerica Incorporated (CMA - Free Report) .
Goldman witnessed an upward earnings estimate revision of 2.2% for the current year, over the past 30 days. Its share price has risen 33.5%, year to date. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica also boasts a Zacks Rank #1. Over the past 30 days, its Zacks Consensus Estimate moved slightly up, for the current year. Its share price has increased 64.1%, year to date.
Zions carries a Zacks Rank #2 (Buy). It recorded an upward earnings estimate revision of 3.8% for the current year, over the past 90 days. Year to date, its share price is up 58.5%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>