CIT Group Upped to Outperform - Analyst Blog


We upgraded our long-term recommendation on CIT Group Inc. ( CIT ) to Outperform from Neutral based on its efficient capital deployment activities.

Rationale Behind the Upgrade

CIT Group's third-quarter 2013 earnings came in at 99 cents, beating the Zacks Consensus Estimate by a nickel. The reported figure also compared favorably with a loss of $1.49 per share in the year-ago quarter. With this, the company has delivered three positive earnings surprises in the past four quarters with an average beat of 19.1%.

Over the last 60 days, the Zacks Consensus Estimate for 2013 declined 1.4% to $3.60 per share. However, the Zacks Consensus Estimate for 2014 was nearly stable at $4.10 per share over the same time frame. CIT Group has a Zacks Rank #1 (Strong Buy).

Given CIT Group's stable capital position, we believe that the company will continue to enhance shareholder value in form of share buybacks and regular payouts. Moreover, the company has been consistently lowering its debt burden by either eliminating or refinancing high-cost long-term debt. Apart from lowering the funding cost, the initiative continues to aid margin growth.

Further, a steadily improving global economy and advancing domestic market are expected to increase demand for financing of inventories and capital equipments, thereby enabling CIT Group to witness earnings asset growth.

Other Stocks Worth Considering

Other financial service providers worth considering include Portfolio Recovery Associates Inc. ( PRAA ), American Express Co. ( AXP ) and Blackhawk Network Holdings, Inc. ( HAWK ). While Portfolio Recovery carries the same Zacks Rank as CIT Group, American Express and Blackhawk Network Holdings hold Zacks Rank #2 (Buy).

AMER EXPRESS CO (AXP): Free Stock Analysis Report

CIT GROUP (CIT): Free Stock Analysis Report

BLACKHAWK NETWK (HAWK): Free Stock Analysis Report

PORTFOLIO RCVRY (PRAA): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AXP , CIT , HAWK , PRAA

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