Wednesday, January 23, 2019

Synovus Now Firmly In The 'Show Me' Camp

It's no secret that bank stocks have sold off significantly over the past six months, even with a nice bounce after Christmas, as investors have increasingly priced in a recessionary environment and abandoned the sector for greener pastures. In the case of Synovus (SNV), not only has the market priced in a harsher near-term environment (which may or may not be reasonable given its exposure to higher investment property exposure in the Southeast US), but it has also levied a penalty for the company's decision to acquire Florida's FCB.

I had warned that Synovus shares would probably linger under a cloud for a while after the deal, but I didn't think that would mean a roughly 15% underperformance to regional bank benchmarks in just six months. Synovus isn't going to be a torrid organic grower, it faces plenty of incoming competition in the Southeast, and management still has work to do with its funding mix, but I think the discount today is too wide. I can't say that this is my favorite bank from an operational perspective, but the embedded expectations seem too low to me today.

Read more here:
Synovus Now Firmly In The 'Show Me' Camp

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