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BB&T Not Ready to Outperform

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.

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