On Jun 6, 2013, we reaffirmed our long-term recommendation on
CIT Group Inc.
) at Neutral. This is based on the company's first-quarter
results, which though lagged the Zacks Consensus Estimate, were
better than the year-ago quarter figure.
CIT Group's first-quarter earnings came in at 81 cents per share
and was nearly 9% below the Zacks Consensus Estimate. However,
this was an improvement from the year-ago loss of $2.13.
Lower-than-expected results were due to lower non-interest income
and a rise in operating expenses, partially offset by an
increased net interest revenue. However, consistently improving
credit quality and stable capital ratios were the tailwinds.
Following first-quarter results, the Zacks Consensus Estimate for
2013 fell 3.0% to $3.58 per share over the last 60 days.
Likewise, the Zacks Consensus Estimate for 2014 dropped 1.8% to
$3.92 per share. CIT Group now has a Zacks Rank #3 (Hold).
In May 2013, CIT Group announced a $200 million worth share
repurchase program. Given the company's stable capital position,
we believe that it will continue to enhance shareholder value.
Further, gradual improvement in the global economy as well as
domestic market are expected to raise demands for the
financing of inventories and capital equipments, thereby leading
to higher earnings asset growth for CIT Group.
However, as of Mar 31, 2013, the company provided approximately
70% of its total lending to commercial airlines, manufacturing,
students, retail and services industries. The anticipated
sluggish growth in these sectors could hamper the CIT Group's
growth prospects as the borrowers may not be able to make timely
payment of loans and interests.
Other Stocks Worth Considering
Better performing stocks in the same industry that are worth a
FleetCor Technologies, Inc.
Euronet Worldwide Inc.
Financial Engines, Inc.
). While the first stock carries a Zacks Rank #1 (Strong Buy),
the other 2 have a Zacks Rank #2 (Buy).
CIT GROUP (CIT): Free Stock Analysis Report
EURONET WORLDWD (EEFT): Free Stock Analysis
FLEETCOR TECH (FLT): Free Stock Analysis
FINANCIAL ENGIN (FNGN): Free Stock Analysis
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