It has been about a month since the last earnings report for CIT Group . Shares have added about 10.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CIT due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CIT Group Beats on Q2 Earnings as Revenues Improve Y/Y
CIT Group’s second-quarter 2021 adjusted earnings per share of $2.09 outpaced the Zacks Consensus Estimate of $1.24 by a considerable margin. In the prior-year quarter, the company had incurred adjusted loss of 62 cents per share.
Results benefited from substantial reserve releases, improvement in revenues and lower expenses. Further, the balance sheet position remained strong.
After considering noteworthy items, net income available to common shareholders (GAAP basis) was $215 million or $2.14 per share against net loss of $98 million or 99 cents per share incurred in the year-ago quarter.
Revenues Rise, Expenses Down
Total net revenues (non-GAAP) were $477.6 million, up 16.3% year over year.
Net interest revenues were $266.3 million, growing 9% year over year.
Total non-interest income was $348.9 million, up 15%. The rise was due to an improvement in other non-interest income.
Net finance margin improved 31 basis points year over year to 2.45%.
Operating expenses (excluding noteworthy items and intangible asset amortization) were $249.1 million, down 15.5%.
Credit Quality Improves
The company recorded net provision benefit of $72.2 million against provision of $223.6 million in the year-earlier quarter. Net charge-offs were $26 million, plunging 84.7%. Non-accrual loans declined 1.3% year over year to $549 million.
Balance Sheet Strong, Capital Ratios Improve
As of Jun 30, 2021, average interest-bearing cash and investment securities amounted to $10.83 billion, comprising $5.58 billion in interest-bearing cash, and $5.25 billion in investment securities and securities purchased under the agreement to resell.
As of Jun 30, 2021, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.6% and 15.0%, respectively, compared with 10.0% and 13.2% at the end of the prior-year quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 10.44% due to these changes.
VGM Scores
At this time, CIT has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise CIT has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Image: Bigstock
CIT (CIT) Up 10.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for CIT Group . Shares have added about 10.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CIT due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CIT Group Beats on Q2 Earnings as Revenues Improve Y/Y
CIT Group’s second-quarter 2021 adjusted earnings per share of $2.09 outpaced the Zacks Consensus Estimate of $1.24 by a considerable margin. In the prior-year quarter, the company had incurred adjusted loss of 62 cents per share.
Results benefited from substantial reserve releases, improvement in revenues and lower expenses. Further, the balance sheet position remained strong.
After considering noteworthy items, net income available to common shareholders (GAAP basis) was $215 million or $2.14 per share against net loss of $98 million or 99 cents per share incurred in the year-ago quarter.
Revenues Rise, Expenses Down
Total net revenues (non-GAAP) were $477.6 million, up 16.3% year over year.
Net interest revenues were $266.3 million, growing 9% year over year.
Total non-interest income was $348.9 million, up 15%. The rise was due to an improvement in other non-interest income.
Net finance margin improved 31 basis points year over year to 2.45%.
Operating expenses (excluding noteworthy items and intangible asset amortization) were $249.1 million, down 15.5%.
Credit Quality Improves
The company recorded net provision benefit of $72.2 million against provision of $223.6 million in the year-earlier quarter. Net charge-offs were $26 million, plunging 84.7%. Non-accrual loans declined 1.3% year over year to $549 million.
Balance Sheet Strong, Capital Ratios Improve
As of Jun 30, 2021, average interest-bearing cash and investment securities amounted to $10.83 billion, comprising $5.58 billion in interest-bearing cash, and $5.25 billion in investment securities and securities purchased under the agreement to resell.
As of Jun 30, 2021, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.6% and 15.0%, respectively, compared with 10.0% and 13.2% at the end of the prior-year quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 10.44% due to these changes.
VGM Scores
At this time, CIT has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise CIT has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.