Truist Financial Grows Revenue But 2023 Impairment Charge Weighs on Earnings
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Truist Financial Corporation is a large financial services company primarily operating in the Southeast and Mid-Atlantic U.S. It has leading market share in several states.
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Revenue and earnings grew slowly over the past decade, with a spike in 2020, but declined in 2023 mostly due to a goodwill impairment charge.
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Net interest income increased 47% in 2023 due to higher interest rates, but net income dropped due to the impairment charge. Guidance expects some declines in 2024.
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The stock price has recovered somewhat from 2020 lows but remains below historical levels. Valuation metrics are near 5-year averages. The current price is a 60% premium to tangible book value.
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The main risk is the high valuation with no margin of safety. Credit, interest rate and regulatory risks also exist but are less concerning for this established company.