CIT Group Inc.
) have recorded a year-to-date return of 29.6%. The strong price
appreciation benefited from top-line growth and lower expenses.
However, we are not so optimistic about these positives
translating into further price appreciation down the road as the
company's earnings will likely be under pressure due to the
sluggishly recovering economy.
After observing CIT Group's fundamentals following its
third-quarter 2013 earnings release, it seems that keeping the
company's shares in your portfolio would not be a bad idea.
However, we discourage further addition of the shares to your
Reasons behind View
CIT Group's third-quarter 2013 operating earnings per share of 99
cents beat the Zacks Consensus Estimate by a nickel and compared
favorably with a loss of $1.49 per share in the prior-year
In order to counter the sluggish economic environment, CIT Group
has been consistently striving to expand its market share. In
2012, the company launched Maritime Finance, which offers secured
loans to operators of ocean-going and inland cargo vessels as
well as offshore vessels and drilling rigs. Moreover, in 2011,
the company announced establishment of CIT Real Estate Finance
business and an online bank. All these initiatives are expected
to drive revenue growth going forward.
Following the termination of CIT Group's agreement with the
Federal Reserve Bank of New York (which restrained the company
from deploying capital without prior approval) in May 2013, the
company announced a $200 million share buyback program. Further,
in Oct 2013, the company reinstated its quarterly payout.
Moreover, CIT Group has a healthy capital position that will
expectedly aid capital deployment in the quarters ahead.
However, sluggish growth in industries such as commercial
airlines, manufacturing, students, services and retail industries
where CIT offers services, along with stringent regulations and a
protracted economic recovery could affect the company's growth.
The Zacks Consensus Estimate for CIT Group showed a mixed trend.
For 2013, over the last 30 days, the estimate rose by a penny to
$3.65. However, for 2014, over the same time span the estimate
dropped by a penny to $4.08. Hence, the company now carries a
Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked financial stocks include
Euronet Worldwide Inc.
FleetCor Technologies, Inc.
). All these have a Zacks Rank #1 (Strong Buy).
CIELO SA ADR (CIOXY): Get Free Report
CIT GROUP (CIT): Free Stock Analysis Report
EURONET WORLDWD (EEFT): Free Stock Analysis
FLEETCOR TECH (FLT): Free Stock Analysis
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