Higher Rates Could Help Bank Stocks, BB&T (BBT) Could Climb 5%

BB&T (BBT) is a regional bank stock with a great chart.
By Bruce Kamich ,

NEW YORK (TheStreet) -- Seems like investors in bank stocks are excited about the possibility of a widening of the net interest margin (NIM) for the industry. One regional bank stock that looks attractive on the chart is BB&T Corp. (BBT) - Get Report .

In this first chart of BBT, above, we can see a small double bottom on BBT in August to September, with a bullish divergence from the momentum study. Prices have rallied over the 50-day Simple Moving Average, and the average is turning up. Prices rallied over the September highs and are just about touching the flat 200-day moving average. All of these positive signals point to a retest of overhead resistance in the $40 to $42 area.

The selloff in BBT this summer looks like just a dip to the bottom of a $42 to $34 trading range. The On-Balance-Volume line is steady to higher, and the Moving Average Convergence Divergence oscillator is giving a positive crossover and heading back to the zero line. We would look for BBT to rally above the flat 40-week moving average.

TheStreet Ratings team rates BB&T CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate BB&T CORP (BBT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BBT's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • After a year of stock price fluctuations, the net result is that BBT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for BB&T CORP is currently very high, coming in at 89.04%. Regardless of BBT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.05% trails the industry average.
  • BB&T CORP's earnings per share declined by 9.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BB&T CORP increased its bottom line by earning $2.73 versus $2.18 in the prior year. For the next year, the market is expecting a contraction of 3.7% in earnings ($2.63 versus $2.73).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income has decreased by 5.0% when compared to the same quarter one year ago, dropping from $557.00 million to $529.00 million.
  • You can view the full analysis from the report here: BBT

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

Loading ...