Why Sun Trust Banks (STI) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of Sun Trust Banks Inc. (STI) are higher 2.86% to $38.73 today following the release of its first quarter 2014 results.

The financial services holding company reported revenue declined $2.0 billion for the current quarter versus a $84 million decline in revenue lost during the first quarter 2013.

However, net income increased 16% to $393 million this quarter from $340 million in the first quarter of 2013.

"Our 16% earnings per share growth over the past year reflects progress in several key areas--expense management, credit quality improvement, and increased lending to clients," said CEO William H. Rogers Jr.

The company's earnings per common diluted share increased to 0.73% from 0.63% in the first quarter 2013.

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TheStreet Ratings team rates SUNTRUST BANKS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SUNTRUST BANKS INC (STI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these 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:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 19.7% when compared to the same quarter one year prior, going from $356.00 million to $426.00 million.
  • The gross profit margin for SUNTRUST BANKS INC is currently very high, coming in at 89.33%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 19.75% is above that of the industry average.
  • Net operating cash flow has significantly increased by 52.81% to $1,626.00 million when compared to the same quarter last year. In addition, SUNTRUST BANKS INC has also vastly surpassed the industry average cash flow growth rate of -85.68%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 36.38% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • SUNTRUST BANKS INC has improved earnings per share by 18.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SUNTRUST BANKS INC reported lower earnings of $2.41 versus $3.59 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $2.41).
  • You can view the full analysis from the report here: STI Ratings Report

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