Synovus Financial SNV continues to reward its shareholders through dividend hikes or additional share repurchases. The company’s board of directors recently increased the share-buyback plan with authorization by $325 million to repurchase shares worth $725 million for 2019. Notably, after repurchase of about $325 million worth common stock under the existing share-buyback program, Synovus had remaining $400 million of common stock available for repurchase during the ongoing year.
Such repurchases may be made in the open market, in privately negotiated transactions, or otherwise. The repurchase authorization does not obligate the company to repurchase any dollar amount or number of securities and may be suspended or discontinued any time.
Funding of the share repurchase is likely to include cash on hand, future cash flow from operations, borrowings and financings.
Notably, Synovus has also been paying quarterly dividends, along with regular hikes. Since December 2016, the company has raised its dividend thrice. Its dividend was last hiked this March by 20% to 30 cents from 25 cents per share.
Synovus has rallied 2.2%, year to date, compared with the industry’s growth of 11.6%. Currently, the stock carries a Zacks Rank #3 (Hold).
With strong liquidity and balance-sheet position, we believe Synovus will continue to reward its shareholders, moving ahead. So, keeping this in mind, is the company worth considering? Let’s dig deeper into its financials and fundamental strengths.
Value Score: Synovus currently has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount.
Earnings Strength: Synovus has an expected earnings growth rate of 8%, for the coming three to five years. With its earnings momentum, the earnings growth rate is anticipated to be around 10.7% for the current year and 2.3% for 2020. Furthermore, the company recorded an average positive earnings surprise of 3.64%, over the trailing four quarters.
Revenue Growth: Synovus is focused on its organic growth strategy. Loans witnessed a CAGR of 5.3% for the last five years (2014-2018). In addition, net interest income (NII) witnessed a CAGR of 8.8% during the same time frame, partly driven by the acquisitions completed during this period. The increasing trend continued in first-quarter 2019 as well. Further, the company’s projected sales growth (F1/F0) of 35.5% (against nil industry average) indicates continued improvement in revenues.
Superior Return on Equity (ROE): Synovus’ ROE of 15.58%, as compared with the industry average of 9.93%, highlights the company’s commendable position over its peers.
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