With 2012 just beginning, now's a smart time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.
Today, let's take a look at Synovus Financial (NYSE: SNV ) . As I discussed last month, Synovus had a dreadful 2011, losing almost half of its value as losses on its real-estate holdings held it back from benefiting from the economy's overall recovery. But will this be the year Synovus finally shines? Below, I'll take a closer look at what people expect from Synovus and its peers.
Forecasts on Synovus Financial
| Median Target Stock Price | $2 |
| 2011 EPS Estimate | ($0.17) |
| 2012 EPS Estimate | $0.13 |
| Expected Annual Earnings Growth, Next 5 Years | 8.75% |
| Forward P/E | 12.3 |
| CAPS Rating (out of 5) | **** |
Sources: Morningstar and Motley Fool CAPS.
Will Synovus come back in 2012?
Synovus has struggled in a tough environment for regional banks, particularly in its home region of the Southeast. Trading at 66% of book value, it's easy to think of Synovus as an amazing value play -- until you look at some of its competitors. Regions Financial (NYSE: RF ) , a larger bank that is also headquartered in the Southeast, trades at less than 40% of book -- even though it was able to turn a profit last year. That makes Synovus look almost expensive by comparison.
The key to the future for Synovus is to improve credit quality. The bank has been able to make much lower provisions for loan losses over the past 12 months than it did during the tough years of 2009 and 2010, although current levels are still nearly 10 times what they were during the mid-2000s. By contrast, Popular (Nasdaq: BPOP ) has loan loss provisions that are higher in absolute terms than Synovus, but they're a lot closer to where they were before the financial crisis. Fifth Third (Nasdaq: FITB ) and Huntington Bancshares (Nasdaq: HBAN ) have made even more progress toward getting their credit quality back to normal, proving that Synovus still has plenty of work to do.
The best remedy for Synovus' problems would be a bounce in the housing market. By helping it get the rest of its bad loans off the book, a true recovery would inevitably make Synovus a better bet going forward.
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