On Mar 18, 2013, we reaffirmed our long-term recommendation on
CIT Group Inc.
) at Neutral. This reflects the company's fourth-quarter results,
which significantly outshined the Zacks Consensus Estimate.
CIT Group's fourth-quarter earnings came in at $1.03 per share,
58.5% higher than the Zacks Consensus Estimate of 65 cents. Also,
this was substantially ahead of the last-year earnings of 22
cents. Quarterly results were driven by augmented revenues,
partially offset by higher operating expenses. Also, continuously
improving credit quality and stable capital ratios were the
highlights of the quarter.
Following fourth-quarter results, the Zacks Consensus Estimate
for 2013 has advanced 10.1% to $3.80 per share over the last 60
days. Likewise, the Zacks Consensus Estimate for 2014 has moved
north (up 6.2% to $4.28 per share). With the Zacks Consensus
Estimates for both 2013 and 2014 increasing, CIT Group now has a
Zacks Rank #2 (Buy).
Over the last few years, CIT Group has been striving hard to
restructure its liability profile through repayment and
refinancing of high-cost debt. Besides lowering the funding cost,
the initiative will improve net interest margin going forward.
Further, gradually improving global economy and advancing
domestic market are expected to raise demands for financing of
inventories and capital equipments, thereby allowing CIT Group to
witness higher earnings asset growth.
Yet, as of Dec 31, 2012, CIT Group provided approximately 71% of
its total lending to commercial airlines, manufacturing,
students, service and retail industries. Expected sluggish growth
of these sectors could hamper the company's growth prospects as
the borrowers may not be able to make timely payment of loans and
Other Stocks Worth Considering
While we prefer CIT Group, other stocks in the same industry that
are worth a look include
Euronet Worldwide Inc.
SS&C Technologies Holdings, Inc.
). All these carry a Zacks Rank #1 (Strong Buy).
CIT GROUP (CIT): Free Stock Analysis Report
EURONET WORLDWD (EEFT): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
SS&C TECHNOLOGS (SSNC): Free Stock Analysis
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