5 Reasons to Add Synovus Stock to Your Portfolio Now

Adding Synovus Financial Corp. SNV stock to your portfolio seems to be a wise idea now. Supported by strong fundamentals, the company is well poised for growth.

The Zacks Consensus Estimate for SNV's 2024 earnings has been revised 4.9% upward in the past 30 days, indicating that analysts are optimistic regarding its earnings growth potential. SNV currently carries a Zacks Rank #2 (Buy).

In the past six months, the stock has risen 19.1% compared with the industry's growth of 16.9%.

Image Source: Zacks Investment Research

Let's delve into the other factors that make SNV an attractive investment option now.

Earnings Growth: The company's earnings have witnessed growth of 9.3% in the last three to five years. For 2024, SNV's earnings are expected to decline 1.5%, while the same is projected to rise 16% in 2025.

Synergy from Merger & Acquisitions: SNV has been investing through mergers and acquisitions to enhance its operations and fortify its footprint in various areas. On Jun 1, 2023, Synovus acquired a 60% equity interest in Qualpay — a cloud-based platform that combines a payment gateway with a robust merchant processing solution. In 2019, it completed the acquisition of FCB Financial Holdings. It looks forward to tapping similar opportunities in the future as well.

Balance Sheet Strength: Synovus' total debt (comprising long-term debt and other short-term borrowings) was $2.28 billion as of Jun 30, 2024, and cash and cash equivalents were $2.29 billion. The company enjoys long-term issuer credit ratings of BBB- and BBB from Standard & Poor's and Fitch, respectively. This will likely enable the company to access the debt market at favorable rates. Given the company's decent cash levels and access to debt markets, it is expected to continue meeting debt obligations, even if the economic situation worsens.

Solid Capital Distributions: Synovus has an impressive capital deployment plan. In January 2024, the bank was authorized to repurchase shares up to $300 million of common stock. As of Jun 30, 2024, approximately $179.3 million worth of buyback authorization remained available. In March 2023, the company announced a 12% hike in its quarterly dividend to 38 cents per share after a 3% increase in 2022 and a 10% hike in 2020. Given the company's strong balance sheet and liquidity position, the continuation of its sustainable capital distribution activities will drive investors' confidence in the stock.

Superior Return on Equity (ROE): Synovus' trailing 12-month return on equity (ROE) reflects its superior utilization of shareholders' funds. The company's ROE of 12.76% compares favorably with the industry's 9.07%.

Other Stocks Worth Considering

A couple of other top-ranked stocks from the same space are First Bancorp FBNC and First Community Corp FCCO, each currently carrying a Zacks Rank #2.

First Bancorp's current-year earnings estimates have been revised 11.3% upward in the past 30 days. FBNC shares have gained 18.5% over the past six months.

The consensus estimate for FCCO's current-year earnings has been revised 9.9% upward over the past 60 days. In the past six months, FCCO's shares have increased 24.6%.

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