This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

BB&T Not Ready to Outperform

Stocks in this article: BBT STI PNC WFC JPM

NEW YORK (TheStreet) -- Despite its solid reputation for operational performances, depositing all of my faith in BB&T (BBT - Get Report) has never been an easy thing to do.

Although management has worked diligently to streamline the bank's operations while also bringing synergies to newly acquired BankAtlantic, I've never bought in to the premium that BB&T shares carried relative to other well-run regional banks like Suntrust (STI) and PNC Financial (PNC). Given the underperformance in BB&T's results, particularly in pre-provision net revenue (PPRN), I believe the stock was always expensive.

PPRN is the financial sector's equivalent of operating income. Investors are correct in pointing out that BB&T does post better revenue results than some of its larger global rivals. Even so, better-than-expected revenue growth has become a meaningless metric in this industry. Besides, the Street doesn't seem to mind the across-the-board revenue decline from all of the large money centers, including Wells Fargo (WFC) and JPMorgan Chase (JPM).

Thursday, BB&T will report fourth-quarter results, and management will have yet another chance to prove skeptics wrong. The Street will be looking for earnings-per-share of 72 cents on revenue of $2.37 billion, which would represent 6.3% year-over-year revenue decline. But as I've said, whether good or bad, it's pointless to measure these banks on revenue.

To that end, for BB&T stock to make sense today management needs to show a strong outperformance in areas like net interest margin. A strong result there would increase BB&T's adjusted income and put to rest some concerns about poor capital utilization relative to the bank's debt. And this is especially important given that BB&T is still in the midst of incorporation BankAtlantic into the fold.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,262.88 -153.97 -0.88%
S&P 500 2,010.13 -11.12 -0.55%
NASDAQ 4,669.21 -14.1970 -0.30%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs