First Horizon (FHN): Income + Buybacks Make a Convincing Value Trade Around $24

Hook & thesis

First Horizon (ticker: FHN) looks like an overlooked regional-bank trade where income and active capital return reduce downside and create a decent asymmetric payoff. The stock trades around $23.80 as of the last print, while management continues to pay a steady $0.15 quarterly dividend and has expanded its repurchase program following strong results earlier in the fiscal year. That combination matters in a sector where yields and capital flexibility drive re-rate potential.

My working thesis: the market is giving First Horizon an earnings multiple that understates the current cash generation profile and shareholder-friendly capital actions. With recent quarterly net income of $266m (Q3 2025), revenues of $889m and per-share quarterly EPS of $0.50, the company is generating earnings and returning capital in ways that support a tactical long (swing/near-term position) from current levels.

What First Horizon does and why it matters

First Horizon Corporation is the parent of First Tennessee Bank, a regional bank with roughly 200 branches concentrated in Tennessee and selected Southern markets. Its reportable segments include Commercial, Consumer & Wealth, Wholesale and Corporate, with most revenue coming from Commercial and Consumer & Wealth. For investors, the key fundamental drivers are net interest income (loan/deposit spreads and balance-sheet mix), fee and noninterest income, credit performance and capital-return dynamics (dividends + buybacks).

Why the market should care: regional banks live and die by their ability to convert interest-rate and loan-deposit dynamics into stable net interest income and to demonstrate capital durability when loans and deposits ebb and flow. First Horizon's recent quarters show steady operating income and consistent net income generation while management continues to return capital, which is a tangible signal in a sector where capital preservation has been a major investor focus.

What the numbers show (selected recent figures)

• Latest quarter (Q3 2025, period ended 09/30/2025): revenues $889m, operating income $344m, net income $266m and diluted EPS $0.50 (diluted average shares 510,351,000).
• Q2 2025: revenues $830m, net income $245m, diluted EPS $0.45 (diluted average shares 513,606,000).
• Q1 2025: revenues $812m, net income $222m, diluted EPS ~ $0.41 (diluted average shares 523,423,000).
• Recent quarter (Q4 2025 actual reported 01/15/2026): EPS 0.52, revenue $888m (earnings calendar confirmation).
• Balance sheet snapshot (Q3 2025): assets $83.192b, equity $9.244b (equity attributable to parent $8.949b).
• Dividends: the company has paid $0.15 per quarter consistently (most recent declaration 10/27/2025, ex-dividend date 12/12/2025, pay date 01/02/2026). Annualized dividend = $0.60, which at a share price of ~$23.86 implies a yield of ~2.5%.

Valuation framing

The exchange snapshot shows the stock trading around $23.80-$23.86 on the last prints, and the recent four reported quarterly EPS figures (Q4 2025 0.52, Q3 2025 0.50, Q2 2025 0.45, Q1 2025 0.41) sum to about $1.88 of trailing twelve-month earnings. That implies a trailing P/E in the mid-teens: 23.86 / 1.88 ≈ 12.7x. For a regional bank with a visible leverage to net interest income and active capital return, sub-13x earnings looks attractive on the face of it.

Note: the dataset did not include an explicit market capitalization figure. I am therefore using the live price and reported earnings to derive an earnings multiple; this is a pragmatic valuation proxy rather than a full market-cap-based enterprise valuation. Historically the stock has traded in the low-to-mid $20s for much of the last 12 months with 52-week movement from the mid-teens up to about $24.61, so today’s pricing is near a recent multi-month high but still reasonable versus normalized earnings.

Why dividends + buybacks matter here

Dividends provide a carry component (annualized $0.60 / ~$23.86 ≈ 2.5%), which is meaningful for income-focused investors in regional bank names. Equally important is the capital-return message. The company has utility to repurchase shares: press coverage (07/31/2025) references an expanded repurchase program after strong Q2 results, and the company's cash-flow statements show periods of significant financing activity across quarters (both positive and negative), consistent with active capital-management decisions. Put simply: a bank that prints consistent earnings and chooses to return capital gives investors a tangible floor under returns and a re-rate vector if buybacks accelerate or earnings surprise to the upside.

Catalysts (2-5)

• Regular dividend payments and any increase to the quarterly dividend - dividend actions confirm capital health.
• Acceleration of share repurchases or a specific buyback authorization size/tempo announcement - this is a direct shareholder-value lever.
• Better-than-expected net interest income from loan growth or improved deposit mix (quarterly earnings releases) - will lift EPS and compress concerns about margins.
• Positive credit trends or lower-than-expected provisions - will boost net income and free up capital for buybacks/dividends.
• Macro: a stable or flatter long-end yield environment would support regional-bank multiples and limit margin compression fears.

Actionable trade idea (tactical long)

Trade type: directional long (defined-risk swing / short-term position).

• Entry: buy in a ladder between $23.25 and $24.00. The stock was printing ~$23.80-$23.86 on the latest trades; a small ladder helps manage intraday volatility.
• Initial stop loss: $20.50 (hard stop). That level sits below the recent support band around $20.80-$21.30 and limits downside to roughly -14% from the current mid-$23s entry.
• Target 1 (near-term): $27.00 - about +13% from the mid-$23s entry. This is achievable with modest re-rating or an earnings/repurchase-driven reaction.
• Target 2 (stretch): $32.00 - about +34% from the mid-$23s entry, appropriate if management materially increases buybacks or the bank re-rates to a mid-teens multiple on sustained earnings momentum.
• Time horizon: swing / near-term position (approximately 3-9 months) to capture re-rating, capital-return announcements, or earnings beats.
• Position sizing & risk: limit any single trade to a size where a move to the stop results in a portfolio loss you can tolerate; this is a medium-risk trade because regional banks remain exposed to interest-rate and deposit volatility.

Risk profile & counterarguments

Below I list the principal risks and then offer a direct counterargument to my bullish thesis so readers see the other side.

• Interest-rate / NII risk: If net interest income compresses (due to deposit-cost pressure, faster repricing on liabilities, or a flattening yield curve that hurts loan pricing), EPS could fall and the multiple could re-rate lower.
• Credit deterioration: Should loan losses pick up materially, provisions would hit earnings and reduce the free cash available for buybacks/dividends. Quarterly provision line items have bounced around historically and remain a key watch item.
• Funding & deposit stability: regional banks are sensitive to deposit flows; an adverse deposit environment would force either higher-cost funding or slower balance-sheet growth.
• Execution on buybacks: the market prices buyback announcements differently than actual repurchase implementation. If management announces a program but executes slowly, the expected EPS lift will lag.
• Macroeconomic shock / systemic risk: adverse events in financial markets that impact bank sentiment broadly would likely drag FHN even if the company’s fundamentals remain intact.

Counterargument - The market is right to be cautious: many regional banks face volatile deposit and funding dynamics. Given the stock’s run from the teens to the low-$20s in 2025, some of the re-rating may already be priced in; a worse-than-expected credit cycle or a surprise drop in NII could easily send shares back to the low-$20s or below. If you accept that scenario, the appropriate stance is smaller size or wait for a deeper pullback closer to $20 where risk/reward improves materially.

What would change my mind

I would become materially less constructive if any of these occur:

• Consecutive quarters of declining net interest income or a visible margin contraction tied to deposit-cost increases.
• A sustained rise in provisions and charge-offs leading to falling net income and tangible book erosion.
• Management signals prudence by halting or materially shrinking repurchases and dividends to preserve capital beyond normal stress planning.
• Broader stress in regional bank funding markets that impacts funding costs meaningfully and persistently.

Conclusion / stance

First Horizon checks the boxes I look for when assembling a tactical value + income trade: consistent quarterly earnings (Q3 2025 net income $266m, EPS $0.50), an ongoing quarterly dividend ($0.15) that produces ~2.5% yield at current prices, and management willingness to return capital (expanded repurchase program). Using the recent four quarters of reported EPS (~$1.88 TTM), the stock trades around a 12.5-13x trailing P/E, which looks constructive if earnings hold and buybacks accelerate.

I'm recommending a defined-risk long with entry between $23.25 and $24.00, a stop near $20.50, an initial target of $27 and a stretch target near $32 on a 3-9 month horizon. The trade is not without risk - watch NII trends, provisions and deposit stability closely. But for investors who want income plus upside from capital return, First Horizon is a reasonable place to be long with strict stops and position sizing.

Disclosure: This is a trade idea for informational purposes and not personalized investment advice. Use position sizing and risk controls appropriate to your portfolio.