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BB&T Corporation Message Board

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  • normlasky normlasky Oct 27, 2011 7:04 AM Flag

    Curent Valuation Considerations

    "EPS not all that important right now as so much of it is manufactured and since the market knows that, it is the price multiple movement that's important not EPS. If the market senses EPS is a bunch of hot air, the multiples will simply come down."

    I believe that virtually all companies manage their quarterly earnings. Accounting involves a lot of gray area. In the case of bbt, the bank is generating better earnings from much improved credit metrics. $800 million plus or 40% plus of their nonaccrual loans are coming from portfolios in run-off mode. I predict that the nonaccruals generated from these portfolios in run-off mode will drop to $100 million by the end of 2012. Bbt is already fulled reserved at 9/30/11 for these bad loans. This is precisely why the provision for bad debt has been dropping - down to 100 bsp last quarter and will ultimately settle in the 60 to 80 bsp range.

    Most of the analysts don't understand this. There is not a better example of a worse understanding of bbt financial model for 2012 and beyond than credit suisse projection found on the Charles Schwab website. Yet that is what the market predominately uses to value the bank.

    The amount of ignorance and stupidity in the market is huge. But that is what makes a market.

36.43-0.48(-1.30%)2:08 PMEDT