Truist Financial (NYSE: TFC) is a national bank formerly known as the Branch Banking and Trust Company (BB&T). The bank changed its name after merging with SunTrust Bank in Atlanta in December 2019
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This story originally appeared on MarketBeat
Truist Financial (NYSE: TFC) is a national bank formerly known as the Branch Banking and Trust Company (BB&T). The bank changed its name after merging with SunTrust Bank in Atlanta in December 2019. You can recognize the name Truist as the bank inherited the naming rights to Atlanta Braves from Major League Baseball after the merger was completed.
Although the banking sector is generally viewed as a low growth sector, regional banks are expected to have a little more upside due to the pandemic. And that says something because some Regionals did very well during the pandemic.
For example, TFC stock is up 79% in the past 12 months. To be fair, many companies will have to break a low bar compared to 2021-2020. A better measure for investors could be to point out the stock is up nearly 10% from pre-pandemic levels.
Some analysts will caution that this is the case when a stock rises too high. Although the analyst consensus tends to buy, seven of the 15 analysts who offer ratings on TFC stocks hold them.
However, this is a regional bank that may very well be worth knowing for a number of reasons beyond the increasing yield on 10 year treasury bills. Here are four reasons you should keep Truist on your list of regional banks to watch.
Why is Truist Financial a Buy?
First, many analysts believe that one of the main growth drivers for banks this year will be the expected economic recovery. With this in mind, Truist has a sizeable presence in the mid-Atlantic and southeastern United States, which gives significant exposure to two of the fastest growing areas in the country.
This leads to the second point. The introduction of vaccines in the US is picking up speed. Despite the recent announcement of a break for the Johnson & Johnson (NYSE: JNJ) Vaccine, the Biden government announced that vaccines are abundant for the country.
During the pandemic, regional banks were more vulnerable to credit losses than the larger banks. This is because they have a larger chunk of their income tied to their loan books. In Truist's case, that's about 63%. Obviously, the sooner businesses can (almost) get back up and running as usual, the better the chances that borrowers will be able to make their payments, thereby reducing depreciation.
Third, Truist is already there while many banks are still trying to join the regional bank consolidation wave. In theory, this gives the bank an advantage over the larger banks.
Finally, like most banks, Truist is expected to generate strong profits. Banks are expected to generate robust profits and Truist is no exception. Analysts are targeting earnings per share of $ 1.08, a 100% increase over the earnings per share of 54 cents Truist posted last year. That would be a 4.8% increase over the year-ago quarter in 2019. This could be evidence that Truist's $ 1.6 billion cost-cutting initiative is beginning to pay off.
Truist is also expected to have sales of $ 5.47 billion, which would be about 2% less both quarterly and year-over-year.
The bottom line at TFC Stock
TFC stock has a consensus buy rating with a price target that indicates a downward trend. On the other hand, the latest price targets are well above the current price. You can do whatever you want with it.
However, the share has a strong institutional stake with over 70%, as hedge funds have an increased interest in the share. The bank exceeded expectations on both the top and bottom throughout the pandemic. It is no small matter.
And even if the stock isn't quite on the same growth path, the stock still pays out a nice dividend, currently generating a yield of around 3%.
As a momentum game, TFC stock is a great option for growth and value in 2021.
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