Will BB&T (BBT) Stock Be Helped By Additional Acquisitions?

NEW YORK (TheStreet) -- BB&T Corp.  (BBT) will buy 41 additional retail branches in Texas from Citigroup (C) in locations including Dallas and Houston for a 5.3% premium to book value on about $2.3 billion in deposits as it seeks to expand in the nation's second-most populous state, the Winston-Salem, NC bank said today, according to Bloomberg.

In December, the lender said it would purchase 21 Citigroup retail locations in several Texas cities.

The bank is seeking to make more acquisitions in the state, said CEO Kelly King.

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Regional lenders including BB&T, U.S. Bancorp (USB) and Huntington Bancshares Inc. (HBAN) are scooping up pieces of rivals as some of the industry's largest lenders including Citigroup and Bank of America Corp. (BAC) exit regions and lines of business, Bloomberg said.

Shares of BB&T are down -0.24% to $37.44.

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

"We rate BB&T CORP (BBT) 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 expanding profit margins, attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The gross profit margin for BB&T CORP is currently very high, coming in at 89.15%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.70% is above that of the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 15.3%. Since the same quarter one year prior, revenues slightly dropped by 8.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • BB&T CORP's earnings per share declined by 24.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BB&T CORP reported lower earnings of $2.18 versus $2.70 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $2.18).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: BBT Ratings Report
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