On Aug 26, 2013, we reaffirmed our Neutral recommendation on
SunTrust Banks, Inc.
). This was based on the company's strong second quarter 2013
results. However, the company's exposure to risky assets, limited
margin growth and persistent regulatory pressures remain the
matters of concern.
BANKUNITED INC (BKU): Free Stock Analysis
FIFTH THIRD BK (FITB): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
SUNTRUST BKS (STI): Free Stock Analysis
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On Jul 19, SunTrust reported second-quarter 2013 earnings per
share of 68 cents, beating the Zacks Consensus Estimate by a
penny. The results came on the back of reduced expenses,
partially offset by a decline in the top line. The quarter also
witnessed stable asset quality and capital ratios.
The Zacks Consensus Estimate for 2013 advanced 0.7% to $2.73 per
share over the last 60 days. Further, for 2014, the Zacks
Consensus Estimate increased 1.4% to $2.96 per share over the
same time period. As a result, SunTrust currently carries a Zacks
Rank #3 (Hold).
SunTrust is an asset for yield-seeking investors. In consistence
with its legacy of share buybacks and dividend hikes, the company
raised its dividend again in April. Moreover, SunTrust aims to
operate more efficiently by focusing on increasing revenues and
controlling expenses. With further improvement in market
conditions, enhanced loan and deposit growth is expected to boost
profitability in the long run.
On the flip side, SunTrust has been facing stiff competition
regarding deposits in the recent quarters. Further, SunTrust's
exposure to C&I, commercial real estate and commercial
construction loans make it vulnerable to the volatile housing
market. Moreover, stricter regulatory requirements are expected
to considerably reduce the company's flexibility with respect to
its business investments and lending volume.
Other Stocks Worth Considering
Some better performing banks include
Fifth Third Bancorp
The PNC Financial Services Group, Inc.
). While BankUnited has a Zacks Rank #1 (Strong Buy), both Fifth
Third and PNC Financial carry a Zacks Rank #2 (Buy).