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10 Bank Stocks With Great Expectations

7. BB&T Corp.

Shares of BB&T Corp. (BBT) of Winston-Salem, N.C. closed at $27.01 Friday, down 13% from a year earlier.

Following the completion of Federal Reserve stress tests, BB&T announced Friday that it would increase its second-quarter dividend by a penny to 16 cents, and also pay a special dividend of a penny a share.

The company had $157 billion in total assets as of December 31, with over 1,800 offices mainly in the South and Southeast, as well as in Washington, D.C.

For 2010, BB&T earned $816 million, or $1.16 a share, improving from net income available to common shareholders of $729 million, or $1.15 a share, in 2009, when the company paid $124 on dividends and accretion on preferred stock, including shares held by the government for $3.1 billion in TARP assistance, which was repaid in June 2009.

BB&T's ROA for 2010 was 0.53%.

The consensus earnings estimate is $1.70 for 2011 and $2.58 for 2012. The forward P/E is 15.9 based on the 2011 estimate and 10.5 based on the 2012 estimate.

On March 15, Matt O'Connor of Deutsche Bank (DB) upgraded the shares to a buy with a $31 price target, saying that the stock's recent underperformance reflected concerns over an increase in troubled debt restructurings and "more recently that BBT would overpay for a deal." The analyst said that M&A concerns seemed "overblown" and that "performance should improve as the stock now trades in line/below peers despite better [long term] revenue growth opportunities."

On March 11, Stephen Moss of Janney Montgomery Scott upgrade BB&T to a buy with a $33 price target, saying the company was "trading at a lower price to earnings ratio than underperforming peers despite being better positioned to benefit from an improving economy and higher interest rates.

Out of 32 analysts covering the company, there are now 10 with buy ratings, while 18 have neutral ratings and four recommend investors sell their BB&T shares.
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