Why Synovus Financial (SNV) Is An Attractive Pick Right Now?

Synovus Financial Corp. (NYSE:SNV) can be a solid bet now on the back of its organic and inorganic growth strategies which have placed the company well for the future. Moreover, its focus on balance-sheet growth is encouraging.

Primarily, as the finance industry is expected to gain from lesser regulations, lower taxes and better interest-rate environment under the Trump administration, Synovus will gain simultaneously. In addition, the company is well positioned to benefit from rising interest rates.

Shares of this Zacks Rank #2 (Buy) company climbed 14.2% over the last six months, outpacing 10% growth registered by the industry. Further, the Zacks Consensus Estimate for the current-year earnings remained unchanged over the past 30 days.

Let’s take a look at the company’s underlying strength:

5 Reasons Why Synovus is a Must Buy

Revenue Growth: Organic growth remains a key catalyst for Synovus, with its net interest income witnessing a Compound Annual Growth Rate (CAGR) of 3.5% over the last four years (2013-2016). Also, loans have increased at a CAGR of 6% for the last four years (2013-2016). In first nine months of 2017, the increasing trend continued for both loans and NII.

Additionally, the company’s projected sales growth (F1/F0) of 12.89% (compared with 0.59% growth for the industry) ensures continuation of the uptrend in the top line.

Earnings Strength: Synovus has witnessed historical (3-5 years) earnings per share growth of 21% compared with 9.62% for the industry. Further, the company’s estimated long-term EPS growth rate of 8% promises rewards for investors. Synovus also recorded an average positive earnings surprise of 4.23%, over the trailing four quarters.

Steady Capital Deployment: Synovus remains committed toward creating value for its shareholders through dividend hikes, share buybacks and acquisitions, thereby reflecting strong balance-sheet position. In October 2016, the company acquired Entaire Global Companies, Inc. Recently, it also completed the purchase of Cabela's banking operation. Furthermore, the company’s board of directors plans to repurchase up to $200 million shares in 2017. Also, it announced a 25% hike in quarterly dividend in March 2017.

Superior Return on Equity (ROE): Synovus’ ROE of 10.44%, as compared with the industry average of 8.4%, indicates the company’s commendable position over its peers.

Stock Looks Undervalued: The stock currently has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score which helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.

Stocks to Consider

Federated Investors, Inc. (NYSE:FII) has been witnessing upward estimate revisions for the past 60 days. In six months’ time, the company’s share price has been up more than 30%. It carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Legg Mason Inc. (NYSE:LM) has been witnessing upward estimate revisions for the last two months. Additionally, the stock moved up more than 4% over the past six months. It currently sports a Zacks Rank of 1.

Artisan Partners Asset Management Inc. (NYSE:APAM) has been witnessing upward estimate revisions for the past month. Also, the company’s shares have risen nearly 31.9% in six months’ time. It also holds a Zacks Rank of 2, at present.

Zacks Editor-in-Chief Goes "All In" on This Stock

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