This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SunTrust: Financial Loser

Bove said that the Bluebird service "raises a series of questions as to whether a major slice of consumer finance activities have now slid into the shadow banking market away from the scrutiny of the regulators." One question is "whether the country will now deal with a two tier financial system. One tier is heavily regulated. The other is not regulated and where funds are transferred between companies in a murky area of non-disclosure," he said.

It remains to be seen how the Consumer Financial Protection Bureau will react, and how, or if, the agency will regulate the Bluebird service, but there is no doubt that today's move by Walmart and American Express is a very important development for the financial services industry.

Bove said that "If Wal-Mart is able to go up market with its products, it will hurt the banks. This is because banks are now relying on price increases on many of the products that Wal-Mart hopes to give away under its new card arrangement. Moreover, if Wal-Mart gets away with doing banking as a retailer many more retailers are likely to enter the fray and the price competition they represent for banks will be formidable."

Walmart's shares rose slightly to close at $75.25, while American Express was up slightly, closing at $58.82.


Getting back to today's financial loser, SunTrust of Atlanta has seen its stock return 69% year-to-date, following a 40% decline during 2011.

The shares trade for 1.1 times their reported June 30 tangible book value of $26.02, and for 11 times the consensus 2013 earnings estimate of $2.78 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate $3.31.

SunTrust will announce its third-quarter results on Oct. 22, with a consensus earnings estimate of $1.83 a share (including several extraordinary items), increasing from 50 cents the previous quarter, and 39 cents a year earlier.

The company on Sept. 6 announced that it would end its investment in Coca Cola (KO), in order to shore up its capital ratios, because the Federal Reserve's proposed capital rules will increase the risk weighting of banks' equity investments.

SunTrust accelerated two forward purchase agreements to sell its Coke shares, while also transferring $3 billion in portfolio loans to held-for-sale, and said that the moves, along with other actions, would lead to a pretax third-quarter gain of $1.9 billion, or $1.2 billion after taxes.
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
AXP $75.15 0.31%
STI $44.20 0.64%
WMT $72.06 0.95%
AAPL $123.23 0.37%
FB $95.36 1.30%


Chart of I:DJI
DOW 17,622.75 +182.16 1.04%
S&P 500 2,093.00 +25.36 1.23%
NASDAQ 5,085.9690 +46.1930 0.92%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs