Long-established in the Banks industry, Truist Financial Corp (TFC, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 2.77%, juxtaposed with a three-month change of -0.51%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Truist Financial Corp.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 3/10
- 2. Profitability rank: 5/10
- 3. Growth rank: 2/10
- 4. GF Value rank: 8/10
- 5. Momentum rank: 2/10
Based on the above method, GuruFocus assigned Truist Financial Corp the GF Score of 59 out of 100, which signals poor future outperformance potential.
Truist Financial Corp: A Snapshot
Based in Charlotte, North Carolina, Truist is the combination of BB&T and SunTrust. Truist is a regional bank with a presence primarily in the Southeastern United States. In addition to commercial banking, retail banking, and investment banking operations, the company operates several nonbank segments, the primary one being its insurance brokerage business. With a market cap of $40.2 billion and sales of $24.1 billion, the company's operating margin is currently not applicable.
Financial Strength Analysis
Truist Financial Corp's financial strength indicators present some concerning insights about the company's balance sheet health. Additionally, the company's low cash-to-debt ratio at 0.46 indicates a struggle in handling existing debt levels.
Profitability Breakdown
Truist Financial Corp's low Profitability rank can also raise warning signals. The company's Net Margin has declined over the past five years (-2.97%), as shown by the following data: 2018: 28.01; 2019: 25.65; 2020: 19.74; 2021: 28.93; 2022: 27.18.
Growth Prospects
A lack of significant growth is another area where Truist Financial Corp seems to falter, as evidenced by the company's low Growth rank. Lastly, Truist Financial Corp predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Truist Financial Corp has a strong reputation in the banking industry, its current financial indicators suggest that it may struggle to maintain its historical performance. Therefore, investors should exercise caution when considering this stock.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
