Since September 2025, Truist Financial has been in a holding pattern, posting a small loss of 2.9% while floating around $44.75.
Is now the time to buy Truist Financial, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Truist Financial Will Underperform?
We don't have much confidence in Truist Financial. Here are three reasons why TFC doesn't excite us and a stock we'd rather own.
1. Net Interest Income Points to Soft Demand
Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.
Truist Financial’s net interest income has grown at a 4.2% annualized rate over the last five years, much worse than the broader banking industry. This was driven by its loan growth as its net interest margin, which represents how much a bank earns in relation to its outstanding loan book, declined throughout that period.
2. Projected Net Interest Income Growth Is Slim
Forecasted net interest income by Wall Street analysts signals a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Truist Financial’s net interest income to drop by 11.3%, a decrease from its flat result for the past two years. This projection is below its flat result for the past two years.
3. EPS Growth Has Stalled
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Truist Financial’s flat EPS over the last five years was weak. On the bright side, this performance was better than its 1.7% annualized revenue declines.
Final Judgment
We cheer for all companies supporting the economy, but in the case of Truist Financial, we’ll be cheering from the sidelines. That said, the stock currently trades at 0.9× forward P/B (or $44.75 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think other companies feature superior fundamentals at the moment. Let us point you toward one of Charlie Munger’s all-time favorite businesses.
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