Synovus Rides On Inorganic Growth Strategy: Time To Buy?

On Jun 20, we issued an updated research report on Synovus Financial Corp (NYSE:SNV) . The company continues to perform well on the back of its strong inorganic growth strategies. Also, its robust balance sheet position keeps us encouraged. However, escalating expenses is a key headwind.

The company’s inorganic growth strategies remain encouraging. In Oct 2016, it acquired Entaire Global Companies, Inc., which is expected to be immediately accretive to its financials. Also, it recently agreed to buy Cabela’s banking operations.

Also, Synovus displayed robust organic growth over the last few years. Loans have witnessed a compound annual growth rate (CAGR) of 6% over the last four years (ended 2016). Net interest income (NII) has seen a CAGR of 3.5% in the same time period. Further, management expects NII to grow in the range of 10–12% in 2017.

Moreover, Synovus remains committed to enhancing shareholders’ value through steady capital deployment activities. The company hiked its common stock dividend by 25% in Mar 2017. Further, management plans to buy back about $200 million shares in 2017.

Nevertheless, the company witnessed mounting expenses in the previous year due to several strategic investments. The company expects expenses to increase 2–4% in the current year.

Synovus’ shares have gained 44.4% over the last one year, outperforming the Zacks categorized Banks - Southeast industry’s rally of 4%.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other stocks worth considering in the financial space include Comerica Incorporated (NYSE:CMA) , M&T Bank Corporation (NYSE:MTB) and Lakeland Bancorp, Inc. (NASDAQ:LBAI) . All these stocks hold a Zacks Rank #2.

Comerica has witnessed an upward earnings estimate revision of 8.8% for the current year in the past 60 days. Also, its shares have rallied 74.7% over the last one year.

M&T Bank’s earnings estimates have been revised upward by 2.4% for the current year, in the past 60 days. Also, over the last one year, its shares have gained 40.7%.

Lakeland has witnessed an upward earnings estimate revision of 2.8% for the current year, in the past 60 days. Also, its shares have jumped 71.2%, over the last one year.

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