On Feb 24, 2014, we issued an updated research report on
SunTrust Banks, Inc.
). The company reported better-than-expected fourth-quarter
results. Lower provision for credit losses and prudent expenses
management were the quarter's highlights.
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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
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
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
SunTrust now has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked major regional banks include
Fifth Third Bancorp
The PNC Financial Services Group, Inc.
). All these stocks have a Zacks Rank #2 (Buy).