It seems to be a wise decision to add BB&T corporation (BBT - Free Report) stock to your portfolio now, given the company’s sound organic and inorganic growth strategies. Also, its efforts to diversify non-interest revenues bode well for long term. Further, its underlying strength, earnings growth prospects and efforts to enhance shareholders value are encouraging.
Analysts seem to be optimistic about the company’s prospects as the stock has been witnessing upward estimate revisions. Over the past 60 days, the Zacks Consensus Estimate for 2018 earnings has been revised slightly upward to $3.99. As a result, it currently carries a Zacks Rank #2 (Buy).
Over the past three months, the stock has lost 9.4% compared with 17,3% decline of the industry it belongs to.Nevertheless, given the upward estimate revisions and a solid Zacks Rank, the stock is expected to gain in the future.
Factors That Make BB&T Worth Betting on
Earnings growth: BB&T witnessed earnings growth of 4.78% over the past three to five years. This earnings momentum is likely to continue in the near term as reflected by the projected earnings per share growth of 43% for 2018 and 9.5% for 2019.
Moreover, BB&T has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 2.7%.
Further, the long-term (three-five years) projected earnings growth rate of 10.5% promises rewards for shareholders.
Revenue strength: BB&T’s revenues witnessed a CAGR of 3% over the last five years (2012-2017). Further, the company has been witnessing a steady improvement in net interest margin over the last several years.
Additionally, BB&T remains focused on growth of non-interest revenue sources, as these are less susceptible to the volatility of capital markets. Further, the company seeks to build client relationships by emphasizing more on the large corporate segment.
Notably, management expects revenues (tax-equivalent basis) to grow in the 1-3% range year over year in 2018.
Efficient capital deployment plan: The company has significantly improved its balance sheet and fundamentals. Its 2018 capital plan (approved by the Federal Reserve) included a 8% dividend hike and $1.7 billion share repurchase authorization. Given the capital strength and solid liquidity position, the company will likely be able to sustain improved capital deployments.
Strong leverage: BB&T’s debt/equity ratio is 0.86 compared with the industry average of 0.94. The relatively strong financial health of the company will help it perform better than its peers under a dynamic business environment.
Favorable VGM Score: BB&T has a VGM Score of B. Our research shows stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Stocks to Consider
Bank of Marin Bancorp (BMRC - Free Report) has witnessed slight upward estimate revisions for 2018 for the past 60 days. Additionally, the stock has jumped more than 20% in the past year. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Second Bancorp, Inc.’s (OSBC - Free Report) estimates have been stable for 2018 over the past 60 days. Also, the company’s shares have risen nearly 22% over the past two years. It holds a Zacks Rank of 2, at present.
First Financial Bankshares, Inc.’s (FFIN - Free Report) estimates have been stable for 2018 for the past 60 days. In two year’s time, this Zacks #2 Ranked company’s share price has been up more than 20%.
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