BB&T Cashes on Acquisitions, Q2 Results Top Estimates

BB&T Cashes on Acquisitions, Q2 Results Top Estimates
July 26, 2016

Aided by the expansion into Lehigh valley, the $29 billion dollar financial services holding company BB&T Corporation (NYSE:BBT), reported a 17.7% rise in the fiscal 2016 second-quarter revenue compared to the corresponding period last year. In addition to this, the bank’s quarterly revenue and estimates surpassed the Zacks consensus estimate. Based on these impressive second-quarter results, strong asset quality and capital levels, we predict the uptrend in the stock to continue, albeit with small retracements. The stock closed at $36.79 on Monday.

The Winston, Salem-based wealth management solution provider reported a rise in the Q2 2016 revenue to $2.79 billion, from $2.37 billion in the Q2 2015. The revenue estimate of analysts was $2.74 billion for the quarter ended June 2016. The bank holding company had recently completed the acquisition of National Penn Bancshares Inc., for $1.8 billion and Susquehanna Bancshares Inc. for $2.5 billion. Most of the increase in the revenue was due to the successful acquisitions. The acquisition also enabled the bank to have operations in 20 locations in the Lehigh valley.

For the quarter ended June 2016, BB&T recorded a net income of $541 million or $0.66 per share, up from $454 million or $0.62 per share in the similar period of 2015.

Excluding restructuring charges and tax benefits, the fiscal 2016 second-quarter net income was $586 million or $0.71 per share. The adjusted earnings surpassed the Zacks estimates of $0.65 per share.

The net interest income was $1.657 billion in the second-quarter, compared to $1.348 billion last year. Total non-interest income was $1.13 billion, up 10.9% from $1.019 billion in the similar quarter last year. The second-quarter insurance income of $465 million, up $43 million y-o-y, mainly contributed to the increase in the total non-interest income. During the Q2 2016, total deposits increased to $160.34 billion, from $149.87 billion in the second-quarter of 2015. The bank’s tier-1 risk-based capital stood at a healthy 11.7%. The leverage capital was 9.6%, while the tangible equity to tangible assets was 7.6%.

As the chart reveals, after testing the support level of 32, the stock continues to rise within the ascending channel. Based on the past price history, we can anticipate a flurry of sellers to arrive at the scene when the stock approaches the level of 42. The RSI indicator is yet to enter an overbought scenario. Thus, we can anticipate an uptrend in the stock price.

BB&T - Technical Analysis - 26th July 2016

A one touch call option contract would be well suited to gain from the forecasted rise in the stock price. With a strike price of about $40 and expiry date between the 15th and 22nd of August, the possibility of finishing the binary trade with an impressive profit is higher.


Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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