This regional bank beat analysts’ estimates by six cents last quarter, posting EPS of $0.78 per share.
SunTrust Banks, Inc. (STI)
from Positive Patterns
Florida and much of the South is showing a much better real estate market these days, and this helps SunTrust Banks, Inc. (STI). STI had its problems with Florida & Georgia/Real Estate during the 2008 smash. The cure has arrived—a better real estate market. The company is in fine shape right now and ready to grow.
STI has restored the dividend and will be free to raise it in the future. STI is not ‘under-the-government-thumb’ as much as the big banks are these days. And best of all, its branches are located in areas that should see organic growth in the next 20 years.
I would expect further improvement in the loan book this year and next. The South has a lot to offer retirees with lower taxes, cheaper real estate, and a cheaper place to live with better weather, all working to the favor of STI. There are a lot of reasons the South should be the fastest growing area of the USA over the next 20 years, percentage wise, and STI is well-placed to benefit from that. When you own a bank, you want one that has people coming to, not leaving your market.
I do believe the analyst community is underestimating the recovery, particularly in the South. Zacks’ estimates are for $3.26 this year and $3.55 in 2016. I think STI will beat both numbers. My guess is that STI will earn $3.40 + this year and $3.80 to$4.00 in 2016. STI sells for about 1.03 times book value and that means STI is still buyable in my opinion.
As the South goes, so goes STI. I would still buy STI up to $44.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, July 8, 2015