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On Mar 18, 2013, we reaffirmed our long-term recommendation on CIT Group Inc. (CIT - Analyst Report) at Neutral. This reflects the company’s fourth-quarter results, which significantly outshined the Zacks Consensus Estimate.

Why Neutral?

CIT Group’s fourth-quarter earnings came in at $1.03 per share, 58.5% higher than the Zacks Consensus Estimate of 65 cents. Also, this was substantially ahead of the last-year earnings of 22 cents. Quarterly results were driven by augmented revenues, partially offset by higher operating expenses. Also, continuously improving credit quality and stable capital ratios were the highlights of the quarter.

Following fourth-quarter results, the Zacks Consensus Estimate for 2013 has advanced 10.1% to $3.80 per share over the last 60 days. Likewise, the Zacks Consensus Estimate for 2014 has moved north (up 6.2% to $4.28 per share). With the Zacks Consensus Estimates for both 2013 and 2014 increasing, CIT Group now has a Zacks Rank #2 (Buy).

Over the last few years, CIT Group has been striving hard to restructure its liability profile through repayment and refinancing of high-cost debt. Besides lowering the funding cost, the initiative will improve net interest margin going forward. Further, gradually improving global economy and advancing domestic market are expected to raise demands for financing of inventories and capital equipments, thereby allowing CIT Group to witness higher earnings asset growth.

Yet, as of Dec 31, 2012, CIT Group provided approximately 71% of its total lending to commercial airlines, manufacturing, students, service and retail industries. Expected sluggish growth of these sectors could hamper the company’s growth prospects as the borrowers may not be able to make timely payment of loans and interests.

Other Stocks Worth Considering

While we prefer CIT Group, other stocks in the same industry that are worth a look include Euronet Worldwide Inc. (EEFT - Snapshot Report), Moody's Corp. (MCO - Analyst Report) and SS&C Technologies Holdings, Inc. (SSNC - Snapshot Report). All these carry a Zacks Rank #1 (Strong Buy).

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