Southeastern banking giant Truist (TFC) has continued to lag many of its peers since my last update (and over the last year), as the market has been pretty impatient regarding the expected savings from the SunTrust merger and stabilization in the net interest margin. Still, the shares are up around 25% since that last article, more than doubling the return of the S&P 500.
Although I don’t believe that Truist shares are wildly undervalued (few of the quality banks are), I do believe that there’s still a relative value trade here, and I still believe that Truist isn’t getting its full due. With one of the best operating footprints in the country, surplus capital to accelerate growth, and a potential “goldilocks” operating environment for a few years, I believe Truist has a good chance to deliver beat-and-raise quarters, particularly as I believe that this slower, more deliberate pace of merger integration could ultimately drive better-than-expected long-term benefits.
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