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CIT Group's (CIT) Future Prospects Do Not Seem Impressive
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CIT Group Inc.’s shares have gained 10.3% since the beginning of the year, outpacing the 6% growth for the Zacks categorized Miscellaneous Service industry. However, various concerns including mounting expenses and deteriorating asset quality make us apprehensive about its future growth prospects.
Moreover, the company has been witnessing downward estimate revisions. Its full-year estimates have been down 1.2% over the past 60 days, indicating that this price performance may not continue in the near term. As a result, CIT Group carries a Zacks Rank #4 (Sell).
Looking at the financials, the company has witnessed persistently rising operating expenses. Expenses have been increasing at a four-year (2012-2015) CAGR of 9.3%. In addition, this uptrend is expected to persist in the near term due to continued investments in franchise.
Also, management is of the opinion that as the company prepares for the sale of Commercial Air, strategic initiatives related costs will flare up, thereby offsetting the benefits of its cost-saving plans.
On the asset quality front, provisions for credit losses have been increasing at a four-year (2012–2015) CAGR of 46.2%. Management projects credit provisions to be in the high end of the range of 0.25–0.50% of the average earning assets in the coming quarters. Additionally, despite a recovery in oil prices, the stressed energy sector remains a major concern.
Though the company has an effective capital deployment strategy in place, regulatory restrictions, including stricter capital requirements, are likely to hurt its flexibility, going ahead. This might also adversely affect its profitability in the years to come.
Investing in the stock of CIT Group, now, is clearly not a wise decision to make. We, however, have some better-ranked stocks in the finance space, which you could consider. These include Farmers Capital Bank Corp. , Carolina Financial Corp. and Citigroup Inc. (C - Free Report) .
Farmers Capital has witnessed an upward earnings estimate revision of 8.8% for the current year, over the past 60 days. Its share price has risen more than 56% year to date. It currently boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carolina also sports a Zacks Rank #1. For the current year, over the past 60 days, its Zacks Consensus Estimate inched up 1.3%. Its share price has increased 70.4% year to date.
Citigroup carries a Zacks Rank #2 (Buy). It has witnessed an upward earnings estimate revision of 1.1% for the current year, over the past 60 days. Its share price is up 16.9% year to date.
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CIT Group's (CIT) Future Prospects Do Not Seem Impressive
CIT Group Inc.’s shares have gained 10.3% since the beginning of the year, outpacing the 6% growth for the Zacks categorized Miscellaneous Service industry. However, various concerns including mounting expenses and deteriorating asset quality make us apprehensive about its future growth prospects.
Moreover, the company has been witnessing downward estimate revisions. Its full-year estimates have been down 1.2% over the past 60 days, indicating that this price performance may not continue in the near term. As a result, CIT Group carries a Zacks Rank #4 (Sell).
Looking at the financials, the company has witnessed persistently rising operating expenses. Expenses have been increasing at a four-year (2012-2015) CAGR of 9.3%. In addition, this uptrend is expected to persist in the near term due to continued investments in franchise.
Also, management is of the opinion that as the company prepares for the sale of Commercial Air, strategic initiatives related costs will flare up, thereby offsetting the benefits of its cost-saving plans.
On the asset quality front, provisions for credit losses have been increasing at a four-year (2012–2015) CAGR of 46.2%. Management projects credit provisions to be in the high end of the range of 0.25–0.50% of the average earning assets in the coming quarters. Additionally, despite a recovery in oil prices, the stressed energy sector remains a major concern.
Though the company has an effective capital deployment strategy in place, regulatory restrictions, including stricter capital requirements, are likely to hurt its flexibility, going ahead. This might also adversely affect its profitability in the years to come.
Investing in the stock of CIT Group, now, is clearly not a wise decision to make. We, however, have some better-ranked stocks in the finance space, which you could consider. These include Farmers Capital Bank Corp. , Carolina Financial Corp. and Citigroup Inc. (C - Free Report) .
Farmers Capital has witnessed an upward earnings estimate revision of 8.8% for the current year, over the past 60 days. Its share price has risen more than 56% year to date. It currently boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carolina also sports a Zacks Rank #1. For the current year, over the past 60 days, its Zacks Consensus Estimate inched up 1.3%. Its share price has increased 70.4% year to date.
Citigroup carries a Zacks Rank #2 (Buy). It has witnessed an upward earnings estimate revision of 1.1% for the current year, over the past 60 days. Its share price is up 16.9% year to date.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>.