Balanced View on CIT Group - Analyst Blog

On Mar 14, 2014, we issued an updated research report on CIT Group Inc. CIT. Though the company reported lower-than-expected fourth-quarter results, its strong balance sheet position and steady capital deployment activities remain impressive.

In 2013, CIT Group had announced initiatives to recommence cash dividend payout and share repurchases following the termination of its agreement with the Federal Reserve Bank of New York (which restrained the company from deploying capital without prior approval). Hence, given the stable capital position, we believe that CIT Group will continue to enhance shareholders' value going forward.

Additionally, CIT Group's revenue growth primarily depends on the overall macroeconomic condition. A steady improvement in the economic environment as well as domestic market is expected to increase demand for financing of inventories and capital equipments, thereby facilitating earnings asset growth for the company.

However, CIT Group reported dismal fourth-quarter results owing to a tax agreement settlement charge. A fall in the top line and higher expenses also dampened the results.

Moreover, the disappointing results triggered a downward revision in the Zacks Consensus Estimate, as analysts became more bearish on CIT Group's future performance. For 2014, the Zacks Consensus Estimate declined 4.2% to $3.93 per share and for 2015, the Estimate fell 8.2% to $4.35 per share in the past 60 days.

CIT Group now has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Some better-ranked banking stocks include Portfolio Recovery Associates Inc. PRAA, Euronet Worldwide Inc. EEFT and General Finance Corporation GFN. All of these have a Zacks Rank #2 (Buy).