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Balanced Risk-Reward for BB&T

Zacks Equity Research

We had issued an updated research report on BB&T Corporation (BBT) on May 23, 2014. The company’s growth trajectory remains impressive, given the steady progress on both the organic and inorganic front. However, pressure on top line and sluggish economic recovery remain matters of  concern.

BB&T continues to grow through acquisitions which aid its revenue increase and geographical expansion. Looking ahead, the company is well-positioned for further inorganic growth driven by its strong balance sheet position.

Additionally, BB&T is a sound asset for yield-seeking investors. The company recently raised its dividend by nearly 4% to 24 cents per share. We believe that the company’s sound capital health will enhance shareholder value going forward.

However, BB&T reported lower-than-expected first-quarter earnings owing to a decline in revenues. Further, persistent rise in total operating expenses remains a key concern. Also, given the prevailing low rate environment, no significant improvement in interest yield is expected over the next several quarters.

Dismal first-quarter results failed to gain investors and analysts’ confidence on the stock. Hence, over the last 30 days, the analysts have become bearish on BB&T. This has caused the Zacks Consensus Estimate for 2014 and 2015 to decrease by a penny to $2.98 and $3.23 per share, respectively.

BB&T currently has a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Some better-ranked banking stocks include CVB Financial Corp. (CVBF), First Republic Bank (FRC) and Central Valley Community Bancorp (CVCY). All of these carry a Zacks Rank #2 (Buy).

Read the Full Research Report on BBT
Read the Full Research Report on CVCY
Read the Full Research Report on FRC
Read the Full Research Report on CVBF

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