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People's United (PBCT) Sees Rising Expenses: Time to Sell? - Analyst Blog

On Feb 12, 2015, we issued an updated research report on People's United Financial Inc. ( PBCT ). The company's top line has failed to exhibit impressive growth, while escalating expenses will likely continue to strain its bottom-line.

People's United's operating expenses have been graphing an upward trend, despite several cost-saving initiatives undertaken by the company. Expenses have increased at a 5-year CAGR (2010-2014) of 1.9%. Moreover, the company anticipates expenses to rise further in 2015. Higher costs can strongly challenge the company's future earnings growth.

An extremely geographically diversified business has rendered People's United highly vulnerable to weaknesses in the local economies which have resulted in a deterioration of overall credit quality. Further, a persistent low rate environment continues to keep the net interest margin under pressure, thus straining top-line growth.

Also, analysts remain bearish about the company's future prospects. Hence, over the last 30 days, the Zacks Consensus Estimates for 2015 slipped 2.3% to 86 cents per share; while for 2016, it decreased 8.6% to 96 cents per share.

Nevertheless, People's United's financials reflect a healthy business portfolio with a strong loan and deposit franchise. Moreover, steady capital deployment measures make the stock an attractive pick for yield-seeking investors.

People's United currently holds a Zacks Rank #4 (Sell).

Stocks Worth a Look

Some better-ranked stocks in the same industry include West Bancorp., Inc. ( WTBA ), United Community Financial Corp. ( UCFC ) and Guaranty Federal Bancshares Inc. ( GFED ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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


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

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