Truist Financial Gains 14.9% in a Year: How to Play the Stock Now

Truist Financial Corporation TFC shares have gained 14.9% in the past year compared with the industry’s growth of 24.9% and the S&P 500 index’s rise of 21.9%. It peers Bank of America Corporation BAC and The Bank of New York Mellon Corporation BK have gained 20.2% and 35.9%, respectively, in the same time frame.

One-Year Price Performance

TFC has had a decent return over the past year, but its performance has remained below the broader industry average. As investors evaluate opportunities in the financial sector, it is important to assess whether TFC offers an attractive valuation at current levels or if waiting for a more favorable entry point would be prudent.

What’s Supporting TFC’s Performance?

Steady Net Interest Income and Margin: Truist Financial is expected to benefit from declining deposit costs following the Federal Reserve’s interest-rate cuts in 2024 and 2025. Lower funding costs are likely to provide some support to net interest margin (NIM) and net interest income (NII), even though a lower-rate environment could exert mild pressure on both. The company’s NIM was 3.03% in 2025 and 2024 compared with 2.98% in 2023. Over the past five years, NII recorded a compound annual growth rate (CAGR) of 1.1% (2020-2025), supported by solid loan demand and a relatively higher interest-rate environment. Going forward, steady loan demand, a stable economic backdrop and declining deposit costs are expected to continue supporting NII growth.

Growth in Fee-Based Revenues: Over the past six years, the company’s non-interest income (excluding securities losses) registered a CAGR of 1.9% (2019-2025). This was majorly driven by benefits from the prior merger deal and strong performance in wealth management and insurance operations. Despite the divestiture of the insurance business, a stronger emphasis on wealth management, along with a gradual recovery in trading and investment banking activities, is expected to support the growth of fee-based revenues in the upcoming period.

Strategic Restructuring Initiatives: Truist Financial has been undertaking several strategic and restructuring initiatives to enhance operational efficiency and support long-term growth. In August 2025, the company unveiled a multi-year investment plan focused on high-growth markets. The plan includes expanding its branch network and strengthening digital capabilities. As part of its restructuring efforts, Truist Financial divested Sterling Capital Management LLC and sold the remaining 80% stake in Truist Insurance Holdings to streamline operations in 2024. Additionally, the acquisition of Service Finance Company strengthened its point-of-sale lending platform. Driven by these restructuring efforts, the company is expected to witness growth in the top line.

Solid Liquidity Aid Strong Capital Returns: As of Dec. 31, 2025, Truist Financial had total debt of $69.8 billion and cash and due from banks and interest-bearing deposits with banks of $36.4 billion.

Given a decent balance sheet position, Truist Financial continues to follow a stable capital distribution strategy. After clearing the 2025 stress test, the company maintained its quarterly dividend at 52 cents per share. Truist Financial has raised its dividend twice over the past five years. At present, it has a dividend yield of 4.29%.

TFC Dividend Yield

Similarly, Bank of America Corporation and Bank of New York Mellon Corporation have each raised their dividends five times over the past five years and currently offer dividend yields of 2.25% and 1.82%, respectively.

Also, the company has a share repurchase program in place. In December 2025, the company announced a new share buyback authorization of $10 billion, replacing the previous program introduced in 2024. The new plan does not have an expiration date. As of Dec. 31, 2025, the entire authorization remained available for repurchases. Management expects to buy back approximately $4 billion worth of shares this year, including about $1 billion in the first quarter.

What’s Hurting TFC’s Growth

Rising Operating Expenses: Despite gains from its 2023 cost-savings program, Truist Financial continues to face pressure from elevated operating expenses. The initiative generated about $750 million in gross savings, helping moderate costs compared with 2020-2023 levels. However, non-interest expenses rose modestly in 2025 due to higher personnel costs and increased spending on digitization. With the company increasing investments in technology upgrades and related initiatives, operating expenses are expected to remain elevated in the near term.

Deteriorating Credit Quality: Weakening credit quality is another factor weighing on the company’s performance. Provisions for credit losses and net charge-offs (NCOs) increased significantly in the past few years. Both metrics recorded a three-year (ended 2025) CAGR of 34.6% and 27.5%, respectively, reflecting a challenging macroeconomic environment.

As a result of a tough operating environment, provisions and NCOs are likely to remain elevated in the near term.

How to Approach TFC Stock Now

Backed by lower funding costs, steady loan demand and growth in fee-based businesses, Truist Financial remains well-positioned to deliver stable performance. Further, its decent liquidity supports the capital distribution plan. Strategic restructuring initiatives, investments in digital capabilities and expansion in high-growth markets are likely to support long-term revenue prospects.

Sales Estimates

However, elevated expenses due to higher personnel costs and continuous investment in technology will hurt Truist Financial's bottom line in the near term. Additionally, a challenging macroeconomic environment could strain its financial performance and lead to weakening credit quality, posing another concern.

Moreover, analysts also seem bearish regarding the company’s earnings growth potential. Over the past seven days, the Zacks Consensus Estimate for the company’s 2026 and 2027 earnings has been revised downward.

Earnings Estimate Revision Trend

Hence, investors should not rush to buy TFC stock now. Instead, they should keep it on their radar and wait for an attractive entry point. Those who already own TFC stock can hold on to it because it is less likely to disappoint over the long term, given its strong fundamentals.

At present, TFC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research