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Why it's Best to Hold BB&T (BBT) in Your Portfolio Now?
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BB&T Corporation remains well positioned for organic growth, supported by a rise in loan and deposit balances. Also, easing margin pressure should aid its top-line growth in the upcoming quarters.
However, the company’s expenses remain elevated, which might curb profitability growth. Also, its significant exposure to risky loan portfolios remains a concern.
The company’s Zacks Consensus Estimate for the current year earnings has been revised 1.4% downward over the past 30 days. The stock currently carries just a Zacks Rank #3 (Hold).
Looking at the fundamentals, the company’s loans and leases have increased at a CAGR of 5.2% in the last five years (2012–2016). Also, non-interest bearing deposits have increased at a three-year (2014-2016) CAGR of 14.3%.
Moreover, the company has also been relying on a number of strategic acquisitions to grow inorganically.
The company has an efficient share repurchase and dividend payment policy in place. Supported by a solid capital position, it should continue to enhance shareholder value through efficient capital deployment activities.
Further, with the interest rate environment improving gradually, BB&T’s margin pressure seems to be easing. This is expected to aid its top-line growth. Notably, following the latest Fed rate hike, the company raised its prime lending rate to 4.25%.
However, the company’s expenses have increased at a CAGR of 3.6% over the last five years (as of the end of 2016). Given that it plans to continue with its acquisitions and mergers in the future, expenses are expected to remain elevated, thereby hurting bottom-line growth.
Also, the company’s significant exposure to commercial, direct retail lending and residential mortgage loan portfolios pose risks. Although it has been successfully disposing assets, it still holds a large amount of risky loans that could pose a problem in case of further deterioration in macro-economic conditions.
BB&T’s shares have gained 21.2% in a year’s time, underperforming the 30.8% growth for the industry it belongs to. Given these concerns, the stock’s movement is expected to be range-bound in the near term.
Mentioned below are a few better-ranked stocks from the finance space:
Zions Bancorporation (ZION - Free Report) has witnessed an upward earnings estimate revision of 8.9% for the current year over the past 30 days. Its share price has increased 48.7% in a year’s time. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica Incorporated’s (CMA - Free Report) Zacks Consensus Estimate for the current year has remained stable over the past 30 days. Its shares have gained 50% in the past 12 months. It carries a Zacks Rank #2 (Buy).
State Street Corporation (STT - Free Report) also carries a Zacks Rank #2. The stock has witnessed an upward earnings estimate revision of 3.6% for the current year over the past 30 days and rallied 33.2% in a year.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
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Why it's Best to Hold BB&T (BBT) in Your Portfolio Now?
BB&T Corporation remains well positioned for organic growth, supported by a rise in loan and deposit balances. Also, easing margin pressure should aid its top-line growth in the upcoming quarters.
However, the company’s expenses remain elevated, which might curb profitability growth. Also, its significant exposure to risky loan portfolios remains a concern.
The company’s Zacks Consensus Estimate for the current year earnings has been revised 1.4% downward over the past 30 days. The stock currently carries just a Zacks Rank #3 (Hold).
Looking at the fundamentals, the company’s loans and leases have increased at a CAGR of 5.2% in the last five years (2012–2016). Also, non-interest bearing deposits have increased at a three-year (2014-2016) CAGR of 14.3%.
Moreover, the company has also been relying on a number of strategic acquisitions to grow inorganically.
The company has an efficient share repurchase and dividend payment policy in place. Supported by a solid capital position, it should continue to enhance shareholder value through efficient capital deployment activities.
Further, with the interest rate environment improving gradually, BB&T’s margin pressure seems to be easing. This is expected to aid its top-line growth. Notably, following the latest Fed rate hike, the company raised its prime lending rate to 4.25%.
However, the company’s expenses have increased at a CAGR of 3.6% over the last five years (as of the end of 2016). Given that it plans to continue with its acquisitions and mergers in the future, expenses are expected to remain elevated, thereby hurting bottom-line growth.
Also, the company’s significant exposure to commercial, direct retail lending and residential mortgage loan portfolios pose risks. Although it has been successfully disposing assets, it still holds a large amount of risky loans that could pose a problem in case of further deterioration in macro-economic conditions.
BB&T’s shares have gained 21.2% in a year’s time, underperforming the 30.8% growth for the industry it belongs to. Given these concerns, the stock’s movement is expected to be range-bound in the near term.
Mentioned below are a few better-ranked stocks from the finance space:
Zions Bancorporation (ZION - Free Report) has witnessed an upward earnings estimate revision of 8.9% for the current year over the past 30 days. Its share price has increased 48.7% in a year’s time. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica Incorporated’s (CMA - Free Report) Zacks Consensus Estimate for the current year has remained stable over the past 30 days. Its shares have gained 50% in the past 12 months. It carries a Zacks Rank #2 (Buy).
State Street Corporation (STT - Free Report) also carries a Zacks Rank #2. The stock has witnessed an upward earnings estimate revision of 3.6% for the current year over the past 30 days and rallied 33.2% in a year.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Learn the secret >>