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4 Reasons to Add Synovus Financial to Your Portfolio Now
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Banking stocks have been significantly drawing investors’ attention following Trump’s election victory and the recent rate hike by the Fed. The rate hike will likely aid top-line growth and ease the prevalent margin pressure to some extent.
Today, we bring you one such stock – Synovus Financial Corp.’s (SNV - Free Report) – which is surging on this background and its own fundamentals.
Shares of Synovus have gained more than 41% in the last six months, significantly outpacing the S&P 500’s growth of only 6.6%. We expect this rally to continue based on its underlying strength. A Zacks Rank #2 (Buy) supports this view.
Let’s take a look at the key driving factors:
Revenue strength: Synovus’ interest income has been improving since 2015, with the uptrend continuing in the first nine months of 2016. Notably, for full-year 2016, management expects growth in net interest income in the high-single digits. In addition, management projects the Fed rate hike to drive net interest margin up, by 1 basis point (bps), in fourth-quarter 2016, on a sequential basis, and 6 bps in 2017.
Improving balance sheet: The company’s strategy to aggressively dispose distressed assets is supporting its capital base. Management expects to continue with its asset disposition strategy in the near future, which will strengthen balance sheet, improve asset quality and boost earnings.
Impressive capital deployment: Backed by strong capital position, the company intends to deploy capital through share buybacks, dividend hikes and acquisitions. In Sep 2016, Synovus entered into an accelerated share repurchase agreement (part of a $300 million-share repurchase program) to buy back $50 million worth of common stock. In Oct 2016, the company completed the acquisition of Atlanta-based specialty financial services company – Entaire Global Companies, Inc. – which is expected to be immediately accretive to its earnings per share, return on equity and return on assets. Such meaningful use of capital will continue to boost investors’ confidence in the stock.
Stock is undervalued: The stock has a price-to-cash flow ratio of 9.57 compared to the industry average of 12.04, which indicates it is undervalued relative to its peers.
Other stocks to consider
Investar Holding Corporation (ISTR - Free Report) : Over the last 90 days, the Zacks Consensus Estimate for the stock revised up 3.7% to $1.12, for the current year.
Carolina Financial Corporation : The Zacks Consensus Estimate for the stock for the current year has climbed up 14.3% to $1.60, over the same time frame.
Farmers Capital Bank Corporation carries the same rank as Synovus. Over the last 90 days, the Zacks Consensus Estimate for the stock for the current year moved up 8.8% to $2.36.
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4 Reasons to Add Synovus Financial to Your Portfolio Now
Banking stocks have been significantly drawing investors’ attention following Trump’s election victory and the recent rate hike by the Fed. The rate hike will likely aid top-line growth and ease the prevalent margin pressure to some extent.
Today, we bring you one such stock – Synovus Financial Corp.’s (SNV - Free Report) – which is surging on this background and its own fundamentals.
Shares of Synovus have gained more than 41% in the last six months, significantly outpacing the S&P 500’s growth of only 6.6%. We expect this rally to continue based on its underlying strength. A Zacks Rank #2 (Buy) supports this view.
Let’s take a look at the key driving factors:
Revenue strength: Synovus’ interest income has been improving since 2015, with the uptrend continuing in the first nine months of 2016. Notably, for full-year 2016, management expects growth in net interest income in the high-single digits. In addition, management projects the Fed rate hike to drive net interest margin up, by 1 basis point (bps), in fourth-quarter 2016, on a sequential basis, and 6 bps in 2017.
Improving balance sheet: The company’s strategy to aggressively dispose distressed assets is supporting its capital base. Management expects to continue with its asset disposition strategy in the near future, which will strengthen balance sheet, improve asset quality and boost earnings.
Impressive capital deployment: Backed by strong capital position, the company intends to deploy capital through share buybacks, dividend hikes and acquisitions. In Sep 2016, Synovus entered into an accelerated share repurchase agreement (part of a $300 million-share repurchase program) to buy back $50 million worth of common stock. In Oct 2016, the company completed the acquisition of Atlanta-based specialty financial services company – Entaire Global Companies, Inc. – which is expected to be immediately accretive to its earnings per share, return on equity and return on assets. Such meaningful use of capital will continue to boost investors’ confidence in the stock.
Stock is undervalued: The stock has a price-to-cash flow ratio of 9.57 compared to the industry average of 12.04, which indicates it is undervalued relative to its peers.
Other stocks to consider
Investar Holding Corporation (ISTR - Free Report) : Over the last 90 days, the Zacks Consensus Estimate for the stock revised up 3.7% to $1.12, for the current year.
Carolina Financial Corporation : The Zacks Consensus Estimate for the stock for the current year has climbed up 14.3% to $1.60, over the same time frame.
Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Farmers Capital Bank Corporation carries the same rank as Synovus. Over the last 90 days, the Zacks Consensus Estimate for the stock for the current year moved up 8.8% to $2.36.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>