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On Tuesday, South State Corporation (NYSE:SSB) retained its Outperform rating from Keefe, Bruyette & Woods (KBW), following news of a sale leaseback transaction that is expected to benefit the company's earnings per share (EPS).
The deal is anticipated to generate a $170 million gain, which equates to a 3% increase to tangible book value (TBV).
According to the firm, while the transaction may initially dilute EPS by about 1% due to increased rent expenses, it has the potential to be 2% accretive to EPS if South State capitalizes on the opportunity to restructure its bonds. KBW pointed out that the company's stock is currently trading at 9.8 times its estimated 2026 earnings and 1.8 times its tangible book value per share (TBVPS).
The analysts from KBW reiterated the $135.00 price target and highlighted the transaction as another positive step for South State, suggesting that it could serve as a protective measure against the impact of rising interest rates.
The firm also expressed confidence in the stock as an investment, citing potential earnings growth through 2025, bolstered by the recent sale leaseback deal.
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