On Feb 24, 2014, we issued an updated research report on SunTrust Banks, Inc. (STI). The company reported better-than-expected fourth-quarter results. Lower provision for credit losses and prudent expenses management were the quarter’s highlights.
On Jan 17, SunTrust reported fourth-quarter 2013 results. Adjusted earnings not only surpassed the Zacks Consensus Estimate but also increased 19% on a year-over-year basis.
Moreover, SunTrust remains an attractive asset for yield-seeking investors due to its strong capital deployment activities. Last year, the company increased its dividend by 100% and continued with its share repurchase activity. The company’s pace of capital generation through improved results in the past several quarters should help it reclaim its pre-recession capital strength.
With the gradual revival of the economy, we expect the loan demand to improve and provide SunTrust the buoyancy to maintain profitability. Further, the company’s healthy capital position and improving credit quality will continue to support its growth process.
The Zacks Consensus Estimate for 2014 increased 2.4% to $3.03 per share over the last 60 days. Moreover, for 2014, the Zacks Consensus Estimate advanced 2.1% to $3.33 per share over the same time period.
However, SunTrust continues to face competition for deposits, as seen in the recent past. Consequently, there remains deposit pricing pressure, which will make the company lose its market share for deposits to some extent. Moreover, we remain concerned about the company’s exposure to risky assets and continued regulatory pressures.
SunTrust now has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked major regional banks include BB&T Corp. (BBT), Fifth Third Bancorp (FITB) and The PNC Financial Services Group, Inc. (PNC). All these stocks have a Zacks Rank #2 (Buy).