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5 Reasons to Add First Horizon (FHN) to Your Stock Portfolio
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Adding First Horizon Corporation (FHN - Free Report) to your portfolio now seems to be a good idea. Supported by higher interest rates and a solid loan and deposit balance, the company is well-poised for growth.
The Zacks Consensus Estimate for FHN’s 2024 and 2025 earnings have been revised upward by 2.2% and 1.3%, respectively, over the past 30 days, indicating that analysts are optimistic regarding its earnings growth potential. FHN currently sports a Zacks Rank #1 (Strong Buy).
Over the past six months, the company’s shares have gained 3.6% compared with the industry’s growth of 0.8%
Image Source: Zacks Investment Research
Now, let’s discuss some of the important factors that make FHN stock worth a look.
Revenue Growth: First Horizon has been witnessing continued revenue growth. The company’s revenues witnessed a compound annual growth rate (CAGR) of 10.1% in the last five years (2018-2023). FHN’s loans and leases saw a CAGR of 18.7% in the last four years (2019-2023). The increase was driven by the company’s acquisitions during that period and a diversified loan portfolio. Additionally, deposits witnessed a CAGR of 19.3% from 2019 to 2023.
FHN’s expansion into higher-growth markets presents the firm with the opportunity to get deposits at a lower cost. Further, as the Federal Reserve isn’t likely to cut the rates in the near future, the net interest income and net interest margins will likely improve due to the bank’s exposure to floating loan rates. This will further help in revenue growth in the near future. Revenues are expected to decline 4.98% in 2024 and rebound and grow at the rate of 3.99% in 2025.
Earnings Growth: First Horizon's earnings have witnessed growth of 5.4% over the past three to five years. Earnings are projected to decline 0.70% in 2024 and rise 8.80% in 2025.
Solid Balance Sheet: The company’s debt/equity ratio of 0.13 is below the industry average of 0.29. This shows First Horizon’s strong liquidity profile.
Further, as of Dec 31, 2023, debt was $1.59 billion, and cash and dues from the bank and interest-bearing deposits with banks were $3.55 billion. The company holds a decent liquidity profile and is expected to meet its debt obligations, even during the current economic slowdown.
Capital Redistribution: FHN has an attractive capital distribution plan. The bank authorized a new share repurchase program worth $650 million in January 2024. The plan will expire on Jan 31, 2025. Also, the bank is consistent in paying dividend to its shareholders throughout the years.
Given its strong balance sheet numbers and a decent liquidity position, along with a favorable debt/equity ratio, the capital-distribution activities for the firm seem sustainable.
Stock Looks Undervalued: FHN has price/book and price/earnings (F1) of 0.88 and 9.68 compared with the industry’s price/book and price/earnings (F1) of 10.3 and 11.34, respectively. The stock has a Value Score of B. Our research suggests that stocks with a Style Score of A or B, when combined with Zacks Rank #1 or 2 (Buy), offer the highest upside potential.
Image: Shutterstock
5 Reasons to Add First Horizon (FHN) to Your Stock Portfolio
Adding First Horizon Corporation (FHN - Free Report) to your portfolio now seems to be a good idea. Supported by higher interest rates and a solid loan and deposit balance, the company is well-poised for growth.
The Zacks Consensus Estimate for FHN’s 2024 and 2025 earnings have been revised upward by 2.2% and 1.3%, respectively, over the past 30 days, indicating that analysts are optimistic regarding its earnings growth potential. FHN currently sports a Zacks Rank #1 (Strong Buy).
Over the past six months, the company’s shares have gained 3.6% compared with the industry’s growth of 0.8%
Image Source: Zacks Investment Research
Now, let’s discuss some of the important factors that make FHN stock worth a look.
Revenue Growth: First Horizon has been witnessing continued revenue growth. The company’s revenues witnessed a compound annual growth rate (CAGR) of 10.1% in the last five years (2018-2023). FHN’s loans and leases saw a CAGR of 18.7% in the last four years (2019-2023). The increase was driven by the company’s acquisitions during that period and a diversified loan portfolio. Additionally, deposits witnessed a CAGR of 19.3% from 2019 to 2023.
FHN’s expansion into higher-growth markets presents the firm with the opportunity to get deposits at a lower cost. Further, as the Federal Reserve isn’t likely to cut the rates in the near future, the net interest income and net interest margins will likely improve due to the bank’s exposure to floating loan rates. This will further help in revenue growth in the near future. Revenues are expected to decline 4.98% in 2024 and rebound and grow at the rate of 3.99% in 2025.
Earnings Growth: First Horizon's earnings have witnessed growth of 5.4% over the past three to five years. Earnings are projected to decline 0.70% in 2024 and rise 8.80% in 2025.
Solid Balance Sheet: The company’s debt/equity ratio of 0.13 is below the industry average of 0.29. This shows First Horizon’s strong liquidity profile.
Further, as of Dec 31, 2023, debt was $1.59 billion, and cash and dues from the bank and interest-bearing deposits with banks were $3.55 billion. The company holds a decent liquidity profile and is expected to meet its debt obligations, even during the current economic slowdown.
Capital Redistribution: FHN has an attractive capital distribution plan. The bank authorized a new share repurchase program worth $650 million in January 2024. The plan will expire on Jan 31, 2025. Also, the bank is consistent in paying dividend to its shareholders throughout the years.
Given its strong balance sheet numbers and a decent liquidity position, along with a favorable debt/equity ratio, the capital-distribution activities for the firm seem sustainable.
Stock Looks Undervalued: FHN has price/book and price/earnings (F1) of 0.88 and 9.68 compared with the industry’s price/book and price/earnings (F1) of 10.3 and 11.34, respectively. The stock has a Value Score of B. Our research suggests that stocks with a Style Score of A or B, when combined with Zacks Rank #1 or 2 (Buy), offer the highest upside potential.
Other Stocks to Consider
Some other top-ranked stocks from the finance space are Guaranty Bancshares (GNTY - Free Report) and Red River Bancshares (RRBI - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
GNTY’s 2024 earnings estimates have increased 18.3% over the past 30 days. Shares of GNTY have gained 2.6% over the past three months.
RRBI’s 2024 earnings estimates have increased 5.4% over the past 30 days. Shares of RRBI have gained 7% in the past three months.