On May 27, 2013, we reiterated our Neutral recommendation on
People's United Financial Inc. ( PBCT ), based on its
healthy capital position and reducing non-performing assets. Yet,
revenue headwinds are a concern amid a tepid economic recovery, low
interest rate and a tough regulatory environment. Further, with the
expanding expense base, we remain somewhat skeptical about People's
United ability to augment earnings in the quarters ahead.META FINL GRP (CASH): Free Stock Analysis
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People's United's first-quarter 2013 earnings came in at 18 cents
per share, in line with the Zacks Consensus Estimate. Earnings
compared unfavorably with $0.19 per share reported in the prior
quarter but came in line with the prior-year quarter.
Lower non-performing assets and loans and deposits growth were the
tailwinds for the quarter. Total net loans stood at $22 billion, up
2.3% sequentially. Moreover, total deposits advanced slightly on a
sequential basis to $21.8 billion. Non-performing assets reduced
1.6% sequentially to $285.1 million as of Mar 31, 2013.
Following the dividend hike of 1.6% in Apr 2012, People's United
declared an enhanced quarterly dividend of $0.1625 per share in Apr
2013. This reflects the company's trend of returning wealth to its
shareholders, with its strong cash generating capabilities.
However, declining revenues due to a drop in the net interest and
non-interest income and elevated expenses was the headwind.
People's United's total revenue, net of expense reported was $302.2
million in the quarter, down 2.3% sequentially. Moreover, results
lagged the Zacks Consensus Estimate of $310.0 million. Non-interest
expenses ascended 2.2% sequentially to $212 million.
Following first-quarter 2013 results, over the last 30 days, the
Zacks Consensus Estimate for 2013 remained stable at 77 cents,
while it increased 1.1% to 88 cents per share for 2014. Hence,
People's United carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better performing stocks in the same sector include
Great Southern Bancorp Inc. ( GSBC ),
Provident Financial Holdings, Inc. ( PROV ) and
Meta Financial Group, Inc. ( CASH ). All these
companies carry a Zacks Rank #1 (Strong Buy).