Earnings Preview: SunTrust Banks

SunTrust (STI) is expected to report Q2 earnings before market open Tuesday, July 22, with a conference call scheduled for 8:00 am ET.

Guidance

Analysts are looking for EPS of 64c on revenue of $2.13B. The consensus range for EPS is 37c to $1.03, while the consensus range for revenue is $2.05B to $2.19B, according to First Call.

Analyst Views

Bernstein recently predicted that SunTrust would report "weak" results. Ladenburg Thalmann forecast early this month that SunTrust would announce a convertible preferred issue on its $2.2B of Coca-Cola (KO) stock. The firm thinks such an offering would remove a number of fears regarding SunTrust, as the 8.3% yield on SunTrust shares would be safe and the bank would not be forced to issue a dilutive share offering. Ladenburg believes a convertible preferred announcement would push shares higher, and potentially squeeze the shorts in the name. The firm maintained their Neutral rating. A number of published reports late last month suggested that J.P. Morgan (JPM) could be interested in acquiring SunTrust. Ladenburg Thalmann may have spurred those reports by writing late in June that the bank was a likely acquisition candidate.

Also in June, SunTrust said it did not expect to change its current dividend, and the bank reiterated that its Q2 net charge-offs would jump between 15% to 20%. 

Comments

[Mr Ed:]

STI WOULD BE SMART TO SELL TO JPM AND USE JPM STRONGER BANKING SKILLS. STI HAS SUCH A GREAT FOOT PRINT THAT JPM WOULD MAKE MUCH MORE MONEY FOR THE STI SHARE HOLDERS.

2008 Jul 21 08:18 PM