Tuesday, December 29, 2015

Seeking Alpha: BB&T Has A Full To-Do List For 2016

Back in July, I thought BB&T (NYSE:BBT) looked a little rich from a valuation perspective, and the shares have sold off about 5% since then - modestly underperforming peers like U.S. Bancorp (NYSE:USB), Wells Fargo (NYSE:WFC), PNC (NYSE:PNC), and Fifth Third (NASDAQ:FITB). Since that time, the company has increased its interest sensitivity a bit, announced another acquisition focused on Pennsylvania, and reiterated its commitment to grow by acquisitions while getting a little more conservative on overall loan growth.

Looking ahead, I don't think BB&T is done doing deals, but I don't believe the company is as likely to pull the trigger in 2016 unless a can't-miss opportunity comes along. Instead, I expect the company to prioritize the integration of its recent acquisitions and particularly the realization of expense synergies. At the same time, I would look for the company to try to offset pricing pressure in its insurance brokerage operations with greater volume and continue to develop its specialty lending operations.

I would describe BB&T's current valuation as "okay". The company paid up for its Pennsylvania acquisitions and its going to take time for those deals to show their value, putting even more pressure on those expense synergies. In the meantime, I like BB&T's strong credit quality and its disciplined approach to loan growth. Investors willing to take the elevated risk will find better banking bargains outside the U.S., but with a fair value in the low $40's, BB&T might be worth a look again today.

Read more here:
BB&T Has A Full To-Do List For 2016

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