"SunTrust Banks has focused on three priorities: optimizing the balance sheet, improving efficiency and increasing needs-met of clients," analysts at BMO Capital said.
Fee income should continue to benefit from investments made in investment banking and wealth management, according to the analyst note.
Credit costs may also remain a positive surprise as net charge-offs could run below normalized levels in the near to intermediate future, BMO Capital added.
Shares of SunTrust Banks are currently down 0.48% to $43.66 in morning trading.
Separately, 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 solid stock price performance, growth in earnings per share, increase in net income, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- SUNTRUST BANKS INC has improved earnings per share by 6.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SUNTRUST BANKS INC increased its bottom line by earning $3.23 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($3.26 versus $3.23).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 5.9% when compared to the same quarter one year prior, going from $405.00 million to $429.00 million.
- The gross profit margin for SUNTRUST BANKS INC is currently very high, coming in at 91.05%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 20.53% trails the industry average.
- STI, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: STI Ratings Report