Shares of BB&T Corporation (BBT) have recorded a year-to-date return of 18.8%. Impressive organic growth and the company’s strong capital position acted as the positives behind this growth story. However, we are not so optimistic about these positives translating to further price appreciation down the road as there will be significant pressure on its bottom line driven by higher expenses.
After analyzing its fundamentals following third-quarter 2013 earnings release, we would suggest to stay invested in it but not to further add it to your portfolio.
Why this Stance?
Though BB&T’s third-quarter 2013 operating earnings per share of 70 cents lagged the Zacks Consensus Estimate by a penny, it came in higher than the earnings of 66 cents in the prior-year quarter. Additionally, the company remains focused on building client relationships by emphasizing more on the large corporate segment. This strategy will continue to improve the quality of its deposit base, reduce funding costs and help improve additional fee income.
However, BB&T’s total non-interest expense rose 1% for the nine months ended Sep 30, 2013. Additional hiring and branch-building are expected to keep operating expenses high in the coming quarters, although management expects a decline in operating expenses going forward.
Further, over the last 30 days, the Zacks Consensus Estimate for 2013 declined 2.1% to $2.79 per share, while the Zacks Consensus Estimate for 2014 declined 0.6% to $3.02 per share. As a result, it carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked financial stocks include SVB Financial Group (SIVB), Fifth Third Bancorp (FITB) and BofI Holding, Inc. (BOFI). While SVB Financial carries a Zacks Rank #1 (Strong Buy), Fifth Third and BofI Holding carry a Zacks Rank #2 (Buy).