On Jan 2, 2014, we retained our Outperform recommendation on
Synovus Financial Corporation
). We are encouraged by the company's efforts to reduce operating
costs and implement strategies to broaden its loan portfolio and
increase non-interest income.
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Why the Reiteration?
Synovus' initiatives to reduce expenses and streamline its
processes are commendable. Such measures are expected to aid the
company's bottom-line growth amid a tepid economic environment.
Additionally, the company's disposal of distressed assets is
expected to strengthen its balance sheet, improve asset quality
and enhance future earnings.
On Oct 22, 2013, Synovus reported a whopping 100% rise in
earnings per share to 4 cents per share in the third quarter of
2013 from the year-ago quarter period. Lower non-interest
expenses and a significant improvement in credit quality were
tailwinds for the quarter.
Also, in Jul 2013, Synovus repaid the bailout money taken from
the government during the financial crisis. The company
repurchased $968 million of its Series A Preferred Stock, which
were issued to the U.S. Department of the Treasury as part of
Synovus' participation in the Troubled Asset Relief Program
(TARP). After settling the TARP obligation, we expect Synovus to
deploy its capital through dividend hikes and share repurchases,
which will further enhance investors' confidence in the stock.
Following the release of third-quarter results, the Zacks
Consensus Estimate for 2013 as well as 2014 remained stable at 14
cents and 19 cents, respectively, over the past 60 days. Synovus
now has a Zacks Rank #4 (Sell).
Other Stocks That Warrant a Look
Some better-ranked stocks in the same sector include
Capital City Bank Group Inc.
State Bank Financial Corporation
). All of these carry a Zacks Rank #1 (Strong Buy).