On Dec 28, 2014, we issued an updated research report on Synovus Financial Corporation SNV. Top-line pressure amid low-interest rate environment remains a key concern for the company. Also, a stringent regulatory landscape for the financial sector poses a near-term headwind. Shares of Synovus have recorded a negative return of nearly 3% over the past month.
The current low interest rate environment has kept Synovus' net interest revenue under pressure. Notably, interest income declined at a 3-year (2012–2014) CAGR of 3.8%; while during the first nine months of 2015, a reversal in trend was noticed. Though the Federal Reserve raised the interest rates, we believe the impact of the same will be minimal unless there is a significant turnaround.
Further, downtrend in profitability metrics poses a risk for Synovus' financials. While the company’s profitability metrics improved on a year-over-year basis, they continue to scale significantly below 2012 levels.
Moreover, all these concerns have rendered analysts bearish on the stock. The Zacks Consensus Estimates for 2015 and 2016 stand stable over the last 60 days.
Nevertheless, at the time when most of the banks are struggling to control expenses, Synovus has managed to lower operating expenses. Through a series of cost-cutting and streamlining initiatives, the company has been prudently managing its expenses.
Currently, Synovus carries a Zacks Rank #4 (Sell).
Key Picks from the Sector
Better-ranked finance stocks include Cardinal Financial Corp. CFNL, Fidelity Southern Corporation LION and FCB Financial Holdings, Inc. FCB. All three stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment