On Feb 26, we reiterated our Neutral recommendation on
People's United Financial Inc.
), based on its prudent expense management and healthy capital
deployment activites. However, lower revenue as a result of lower
net interest income and unsettling macro economic issues remain
the major concerns. Moreover, People's United - a bank holding
company - retains a Zacks Rank #3 (Hold).
People's United's fourth quarter 2012 earnings came in at 19
cents per share, in line with the Zacks Consensus Estimate. Total
revenues, net of expense reported was $309.4 million in the
quarter, down 0.6% year over year due to lower net interest
income, partially offset by higher non-interest income.
Moreover, over the last 60 days, the Zacks Consensus Estimate for
both 2013 and 2014 went down by a penny. However, with the
expense reduction initiatives the company targets to reach
efficiency ratio of 55% in late-2014. We expect such measures to
help improve the company's bottom line in the upcoming quarters.
Further, opportunistic acquisitions as well as robust inorganic
growth has helped the company sustain the Neutral recommendation.
Extensive capital deployment activities also continue to
reinforce investors' confidence in the stock.
However, the low interest rate environment and changing
regulatory landscape are expected to undermine its revenue growth
in the subsequent quarters. Further, given the sluggish market
recovery, we expect the significant disruption and volatility
caused in the financial markets to challenge margins in the
Other Stocks to Consider
Other banking stocks that are currently performing well include
First Defiance Financial Corp.
First Financial Holdings Inc.
Meta Financial Group, Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).
META FINL GRP (CASH): Get Free Report
FIRST DEFIANCE (FDEF): Free Stock Analysis
FIRST FINL HLDG (FFCH): Free Stock Analysis
PEOPLES UTD FIN (PBCT): Free Stock Analysis
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