First Horizon Stock Rises Nearly 9% in 6 Months: Is It Worth Buying Now?

Core Viewpoint - First Horizon Corporation (FHN) has outperformed its industry with an 8.8% share price increase over the past six months, while the industry grew by 1.5% and the S&P 500 Index rose by 19.7% [1] Performance Summary - FHN's peers, Texas Capital Bancshares, Inc. (TCBI) and BOK Financial Corporation (BOKF), saw share price increases of 15.3% and 9.9%, respectively, during the same period [1] Factors Supporting FHN Stock - Steady loan growth is evident, with a five-year compound annual growth rate (CAGR) of 15% from 2019 to 2024, driven by strategic acquisitions and a diversified loan portfolio [4] - In the first nine months of 2025, loans increased year over year, supported by growth in commercial and industrial segments and stable mortgage lending activity [4] - Although deposits declined, management anticipates stabilization due to growth in promotional and noninterest-bearing deposits and strong customer retention [5] - FHN's net interest income (NII) has a five-year CAGR of 15.7% through 2024, with an upward trend continuing into 2025, aided by recent Fed rate cuts [6] - As of September 30, 2025, FHN held $2.1 billion in cash and interest-bearing deposits, indicating decent liquidity to support capital distributions [7] Shareholder Returns - FHN has maintained a consistent dividend, recently announcing a 7% increase to 15 cents per share, resulting in a dividend yield of 2.75%, higher than the industry average of 0.90% [9] - The company authorized a $1 billion share repurchase program in October 2024, with approximately $321 million remaining as of September 30, 2025 [10] Near-Term Challenges - Rising non-interest expenses have expanded at a five-year CAGR of 10.6%, primarily due to higher personnel and technology costs, which may weigh on margins [11] - As of September 2025, commercial and commercial real estate loans accounted for over 76% of total loans, exposing FHN to sector-specific risks [13] Estimates and Valuation Analysis - The Zacks Consensus Estimate for FHN's sales suggests a year-over-year increase of 5.6% for 2025 and 3.2% for 2026, with earnings expected to rise by 18.1% and 6.8% for the same years [14] - FHN stock is currently trading at a trailing price-to-earnings (P/E) ratio of 11.28X, lower than the industry's 12.6X [16] Investment Consideration - Despite near-term headwinds from elevated expenses and loan concentration risks, FHN is positioned to benefit from stable NII growth and improving funding conditions [19] - The company's strong fundamentals and sustainable capital distribution policy suggest potential for long-term shareholder value [20]