BB&T Corporation Valuation – November 2016 $BBT

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how BB&T Corporation (BBT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): BB&T Corporation is a financial holding company. The Company conducts its business operations primarily through its bank subsidiary, Branch Banking and Trust Company, and other nonbank subsidiaries. Its segments include Community Banking, which offers a range of loan and deposit products and other financial services; Residential Mortgage Banking, which retains and services mortgage loans originated by Community Banking, as well as those purchased from various correspondent originators; Dealer Financial Services, which originate loans to consumers on a prime and nonprime basis for the purchase of automobiles; Specialized Lending, which consists of business units and subsidiaries that provide finance products to consumers and businesses; Insurance Services, which provide property and casualty, employee benefits and life insurance to businesses and individuals; Financial Services, which provide asset management, corporate trust services and others, and Other, Treasury and Corporate

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:


Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,481,938,705 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 14.57% Fail
5. Moderate PEmg Ratio PEmg < 20 17.03 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.22 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value


EPSmg $2.61
MG Growth Estimate 5.05%
MG Value $48.59
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $37.87
MG Value based on 0% Growth $22.20
Market Implied Growth Rate 4.27%
Current Price $44.49
% of Intrinsic Value 91.56%

BB&T Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.95 in 2012 to an estimated $2.61 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 4.27% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into BB&T Corporation revealed the company was trading below its Graham Number of $45.29. The company pays a dividend of $1.12 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.03, which was above the industry average of 13.43.

BB&T Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research


Graham Number $45.29
PEmg 17.03
PB Ratio 1.22
Dividend Yield 2.52%
TTM Dividend $1.12
Number of Consecutive Years of Dividend Growth 6


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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $22,776,000,000
Total Assets $222,622,000,000
Intangible Assets $11,347,000,000
Total Liabilities $192,570,000,000
Shares Outstanding (Diluted Average) 823,106,000

Earnings Per Share History

Next Fiscal Year Estimate $2.74
Dec2015 $2.56
Dec2014 $2.72
Dec2013 $2.19
Dec2012 $2.70
Dec2011 $1.83
Dec2010 $1.16
Dec2009 $1.15
Dec2008 $2.71
Dec2007 $3.14
Dec2006 $2.81
Dec2005 $3.00
Dec2004 $2.80
Dec2003 $2.07
Dec2002 $2.72
Dec2001 $2.12
Dec2000 $1.53
Dec1999 $1.71
Dec1998 $1.63
Dec1997 $1.23
Dec1996 $1.17

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.61
Dec2015 $2.50
Dec2014 $2.35
Dec2013 $2.05
Dec2012 $1.95
Dec2011 $1.72
Dec2010 $1.84
Dec2009 $2.31
Dec2008 $2.89
Dec2007 $2.91
Dec2006 $2.75
Dec2005 $2.66
Dec2004 $2.41
Dec2003 $2.16
Dec2002 $2.11
Dec2001 $1.76
Dec2000 $1.53

Recommended Reading:

Other ModernGraham posts about the company

BB&T Corporation Valuation – May 2016 $BBT
11 Best Stocks For Value Investors This Week – 11/21/15
BB&T Corporation Valuation – November 2015 Update $BBT
The Best Companies of the Banking Industry – October 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15

Other ModernGraham posts about related companies

Comerica Inc Valuation – August 2016 $CMA
US Bancorp Valuation – August 2016 $USB
Bank of New York Mellon Corp Valuation – August 2016 $BK
Best Stocks to Invest In: the Bank Industry – August 2016
JPMorgan Chase & Co Valuation – July 2016 $JPM
Dominion Resources Inc Valuation – July 2016 $D
M&T Bank Corp Valuation – July 2016 $MTB
Citigroup Inc Valuation – July 2016 $C
Bank of America Corp Valuation – July 2016 $BAC
Fifth Third Bancorp Valuation – July 2016 $FITB


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.






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