Not sure how you modeled the price, Edward. BB&T's price has always been a function of its dividend and the periodic increases thereto. For over a decade it HAS NOT been priced on the banks ability to make strategy changes, acquisitions, etc., that are reflected in capital appreciation per share. You need to model the price only on the relative value of the dividend, its safety, and its anticipated increases (i.e. the rate of inflation) and not on any fundamental change, merger, acquisition. This bank has been a one-trick pony for a long time and there is no ecvidence of any change on that front. BAC, GS, MS on the other hand, that's a whole other valuation model.
I have calculated that BBT should under most situations be valued at 3 dollars over BAC. Therefore I do think this can and probably will hit the mid 20's. Hard to believe BAC took a 25% hair cut today !!!
Ooooooooooohh! I'll get this to KK right away, they have all been eagerly awaiting your next brilliant analysis. " For the past ten years they did nothing, as evidenced in the stock price, and doing nothing turned out to be a good move". Meaning they ignored your previous brilliance for the last 10 years, and turned out fairly well, as you never see BBandT in any negative story or fraud or phony like all those biggies you used to tout highly. Btw numbie, ole Smarty needs your counsel quickly. I went to the mount recently had a glass of the fruit of the vine and spoke to JC about it. He said bring numbie in on this one, he cured fweeqie
I might have to disagree with you. I dont think it will go back to the 20s. But I never thought this thing would go to the teens, either, and it did. The market is very comfortable with the stock in its guarded range right now. The dividend probably wont grow very much for the next 2-3 years, and may be flat, so at a minmum you are locking in a 5%+ return for the foreseeable future. That may mean it is overvalued, as long term rates will rise over the same period. So maybe the 5% yield is not enough. I just cant see this going back to the 20s with the amount of capital they have. I could be VERY sure of that statement if BB&T would just go announce a deal. Everyone else is making great deals right now, and here is BB&T with this "bullet proof" balance sheet and they are not putting it to work.
I agree that BB&T is solid and we'll see this with their earnings report. I'm hoping they do get into the deal making mode soon - they are certainly more stable and capitalized than most. They are a big secret "out there"...but the secret is about to get out!