Regional banks have spent 2026 rebuilding the credibility they lost in 2023, when panicked customers withdrew large sums of money. The Federal Reserve’s interest rate cuts have eased the funding costs, and loan growth is picking up again across the Southeast and Mid-South regions. First Horizon Corporation (NYSE:FHN), the Memphis-based lender, which benefits directly from this regional banking recovery, just got a very public nudge from Jim Cramer – the Mad Money host. In the lightning round on July 27, Jim endorsed First Horizon, calling it “a terrific stock, very inexpensive”.
I think it’s a terrific stock, very inexpensive. I think you should buy it.
Cramer’s call on the stock comes two weeks after First Horizon released its second quarter results. The print indicated net income of $260 million, up 12% year-over-year, and EPS of $0.54, beating the $0.53 consensus by a penny. Adjusted EPS saw a 20% year-over-year growth. The company’s revenue was in line with the estimates, reaching $887 million. Aside from financial growth indicators, the underlying trends also showed improved performance. Loans saw a growth of roughly $2 billion year-over-year while deposits went up by $1.6 billion sequentially, and the bank’s return on equity climbed over 15%.
Complications in the “Inexpensive” Thesis
Even amid these numbers, Cramer’s framing does not accurately capture the true position of First Horizon. The company trades at 1.77 times tangible book value, 10% above its own 10-year average. Shares are up 13.14% over the past year and sit near $25.40 currently. These numbers do not reflect a discounted regional bank. They represent a bank that the market has already pushed toward the top of its peer group. In other words, Cramer’s “buy” is not a bargain call, but a bet that strong profits justify a premium price.
Rising Costs Are the Real Risk, Not Bad Loans
Higher deposit costs resulted in a slight slippage in net interest margins, while overall expenses grew alongside loan growth. Nevertheless, credit quality stayed resilient, showing only modest increases in loan losses. The company also engaged in aggressive stock buybacks, shrinking the total share count by nearly 7% over the past year, which ended up lifting the earnings per share. Short float of 2.73% down from 3.50% the previous month, indicates that bearish market traders are exiting their negative positions.
Hedge Fund Conviction
The stock’s holdings by smart money have narrowed but didn’t shrink. According to our Insider Monkey database, 54 hedge funds had ownership stakes in First Horizon at the end of the first quarter of 2026, down from 57 in the prior quarter. Though the hedge fund managers backing the stock have declined by 3, the institutional support remains robust, signaling strong confidence in the stock.
Verdict
First Horizon Corporation (NYSE:FHN)’s fundamentals reflect Cramer’s enthusiasm more than his choice of words. This is indeed a high-conviction stock for existing owners, but considering today’s price, it’s not cheap for new investors. A pullback closer to the stock’s long-run average valuation would make it far more attractive for new buyers.
While we acknowledge the risk and potential of FHN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FHN and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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