Even though the stock has stagnated recently, the company does possess a solid operation and considerable value.
Investors, however, need more growth to justify hopping onboard. Last month's first-quarter earnings report offers clues about where BB&T is headed and whether its stock is worth a shot.
Mixed First QuarterNot much was expected from BB&T, which was a good thing because there was little to get excited about. The bank had a tough time with lending activity, which again was lethargic - albeit, consistent with the overall sector. Despite the weak lending environment, BB&T s managed to report a 4% increase in operating revenue. Net interest income fell 1% year over year and 4% from the prior quarter. Ordinarily that would be a concern, but BB&T's results were actually better than those of JPMorgan, whose net interest income fell 6% year-over-year and 2% from the prior quarter. Other than U.S. Bancorp (USB), which saw a 1% increase, there weren't many banks that saw an uptick in net interest income. So I'm willing to excuse BB&T here. But that needs to improve to support a higher valuation.
BB&T posted better-than-expected results in fee income, which rose 11% year over year. That is despite weak results in mortgage banking. Fee income is an area where BB&T is outperforming the likes of Bank of America (BAC) and U.S. Bancorp. These numbers weren't breathtaking. But they weren't horrible, either. The good news is that management expects better performances in the future and seemed to be optimistic about the rest of the year.
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