From a valuation perspective, Truist Financial Corp (TFC) appears to be an attractive investment option. The bank's trailing PE ratio stands at
9.09, which is considerably lower than the industry average, indicating that the stock is undervalued. Additionally, the bank's book value per share is
41.37 times, while the price to book ratio is
0.87, suggesting that the market undervalues
the intrinsic value of the bank's assets. This low valuation, coupled with a robust net income from continuing operations of
$6.3 billion, positions TFC as a potentially lucrative investment. However, investors should also consider the company's high probability of bankruptcy at
70.84%, which introduces a significant risk factor.
Main Points
Truist Financial Corp carries a debt of $66.62 billion. While debt can be beneficial for Truist Financial in the short term, it can pose problems if the company struggles to pay it off, either through new capital or free cash flow. In such a scenario, Truist Financial's shareholders could potentially lose their entire investment if the company fails to meet its legal debt repayment obligations.
However, a more common scenario is when companies like Truist Financial Corp issue additional shares at discounted prices, which dilutes the value of existing shares. In this context, debt can be a superior tool for Truist to invest in growth opportunities that offer high rates of return.
When evaluating Truist Financial's use of debt, it's important to consider it in conjunction with the company's cash and equity positions.
Truist Financial Corp's recommendation module can be utilized to verify and cross-check the current trading recommendations provided by analysts. These recommendations are based on the firm's growth potential, as determined by a comprehensive analysis of all available fundamental, technical, and market data at the time.
We determine the current worth of Truist Financial Corp using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Truist Financial Corp based exclusively on its
fundamental and basic
technical indicators. By analyzing Truist Financial's
financials, quarterly and monthly indicators, and related drivers such as
dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of
Truist Financial's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Truist Financial. We calculate exposure to Truist Financial's
market risk, different
technical and
fundamental indicators, relevant financial multiples and ratios, and then
comparing them to Truist Financial's related companies.
Truist Financial Corp Investment Alerts
Truist investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Truist Financial Corp performance across your portfolios.Please check all
investment alerts for Truist
Truist Financial Valuation Ratios as Compared to Competition
Our valuation model uses many indicators to compare Truist value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Truist Financial competition to find
correlations between indicators driving the intrinsic value of Truist.
Truist Financial Gross Profit
Truist Financial Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Truist Financial previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Truist Financial Gross Profit growth over the last 10 years. Please check Truist Financial's
gross profit and other
fundamental indicators for more details.
What is driving Truist Financial Investor Appetite?
The latest price surge of Truist Financial created some momentum for shareholders as it was traded today as low as
35.44 and as high as
36.23 per share. The company management teams may have good odds in positioning the company resources to exploit
market volatility in
February. The stock standard deviation of daily returns for 90 days investing horizon is currently 2.01. The current volatility is consistent with the ongoing market swings in
December 2023 as well as with Truist Financial Corp unsystematic, company-specific events.
| 2021 | 2022 | 2023 | 2024 (projected) |
Cash and Equivalents | 20.3B | 21.4B | 24.6B | 26.6B | Total Assets | 541.2B | 555.3B | 638.5B | 528.6B |
Margins Breakdown
Truist profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Truist Financial itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Truist Financial profit margins.
| EBITDA Margin | 0.47 |
| Gross Margin | 0.89 |
| Profit Margin | 0.29 |
Truist Financial Revenue Per Employee is rather stable at the moment. Truist Financial Earnings Before Interest Taxes and Depreciation Amortization USD is increasing over the last 8 years. Furthermore, Truist Financial Net Income Per Employee is rather stable at the moment. Truist Financial Revenue Per Employee is increasing over the last 8 years.
The previous year's value of Truist Financial Revenue Per Employee was 362,088. Truist Financial Earnings Before Interest Taxes and Depreciation Amortization USD is increasing over the last 8 years. The previous year's value of Truist Financial Earnings Before Interest Taxes and Depreciation Amortization USD was 8,536,963,158. Furthermore, Truist Financial Net Income Per Employee is increasing over the last 8 years. Buy low, sell high is the golden rule of investing, and Truist Financial Corp (TFC) seems to be a prime candidate for this strategy. With a current market capitalization of $48.25B and a book value of $41.37 per share, the stock is trading at a price to book ratio of 0.87X, indicating that it is undervalued. The company's robust
financial health is evident in its net assets of $555.25B and a net income of $6.27B. The forward dividend yield of 0.0575, coupled with a payout ratio of 49.76%, suggests a stable return for investors. However, the probability of bankruptcy stands at 70.84%, which is a risk factor that needs to be considered. Overall, Truist Financial Corp presents a compelling investment opportunity, but potential investors should weigh the risks carefully. .
Will Truist price dip impact its balance sheet?
The most recent kurtosis figure for Truist Financial Corp is at 0.84, which signifies a relatively light-tailed distribution of returns. This implies that the stock encounters fewer extreme fluctuations, potentially signifying less risk for investors. However, a possible price decline could still influence the company's balance sheet, especially if it results in a reduction in market capitalization. Investors are advised to carefully monitor the company's
financial health and market conditions to foresee any potential negative impacts. Truist Financial Corp has comparatively low volatility with a skewness of 0.7 and a kurtosis of 0.84. Nonetheless, we recommend all investors to independently examine Truist Financial Corp to confirm that all available information aligns with their expectations regarding its upside potential and future expected returns. Understanding diverse
market volatility trends often assists investors in timing the market. Proper utilization of volatility indicators allows traders to assess Truist Financial's stock risk against market volatility during both bullish and bearish trends.
The increased level of volatility that accompanies bear markets can directly affect
Truist Financial's stock price while adding stress to investors as they watch the value of their shares decrease. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop. In light of the given data, it's clear that Truist Financial Corp holds a steady position in the market. With an Analyst Target Price Estimated Value of
$38.354, it's relatively close to the Valuation Real Value of
$36.21. This suggests a generally favorable outlook from the market. Despite a higher Valuation Hype Value at $35.44, the market seems to have a realistic view of the company's worth. Furthermore, with the Analyst Overall Consensus leaning towards 'Hold', and the Analyst Number of Holds standing at 10 compared to 3 Buys, it appears that many are choosing to retain their investment in Truist Financial. While there may be some doubts, the current data indicates that Truist Financial Corp is a stable investment. .
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Aina Ster is a Member of Macroaxis Editorial Board. Aina delivers weekly perspective on ongoing market and economic trends, analysis and tips from predictive analysis to forecasting across various financial instruments.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Aina Ster do not own shares of Truist Financial Corp. Please refer to our
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