It has been about a month since the last earnings report for CIT Group . Shares have added about 8.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
CIT Group Q3 Earnings Beat, Revenues & Costs Decline Y/Y
CIT Group’s third-quarter 2021 adjusted earnings per share of $1.84 outpaced the Zacks Consensus Estimate of $1.33 by a considerable margin. The bottom line represents a significant rise from 84 cents per share recorded in the prior-year quarter.
Results primarily benefited from a decline in operating expenses. Also, the company recorded provision benefits in the quarter, which was a major positive. The balance sheet position remained strong. However, lower revenues acted as a headwind.
After considering noteworthy items, net income available to common shareholders (GAAP basis) was $172.7 million or $1.72 per share, up from $82.9 million or 84 cents per share recorded in the year-ago quarter.
Revenues & Expenses Decline
Total net revenues (non-GAAP) were $432.1 million, down 8.8% year over year.
Net interest revenues were $256.8 million, down marginally year over year.
Total non-interest income was $310.9 million, down 10.5% year over year. The decline was due to a fall in rental income on operating lease equipment as well as other non-interest income.
Net finance margin improved 17 basis points year over year to 2.44%.
Operating expenses (excluding noteworthy items and intangible asset amortization) were $259 million, down 9.8% year over year.
Credit Quality Improves
In the reported quarter, the company recorded net provision benefits of $67.1 million against provisions of $63.3 million in the year-earlier quarter. Net charge-offs were $5 million, plunging 92.4% year over year.
Non-accrual loans declined 37.4% year over year to $405 million.
Balance Sheet Strong, Capital Ratios Improve
As of Sep 30, 2021, average interest-bearing cash and investment securities amounted to $10.62 billion, comprising $5.30 billion in interest-bearing cash, and $5.32 billion in investment securities and securities purchased under the agreement to resell.
As of Sep 30, 2021, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.9% and 15.3%, respectively, compared with 9.9% and 13.1% at the end of the prior-year quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -8.26% due to these changes.
VGM Scores
At this time, CIT has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, CIT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is CIT (CIT) Up 8.9% Since Last Earnings Report?
It has been about a month since the last earnings report for CIT Group . Shares have added about 8.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
CIT Group Q3 Earnings Beat, Revenues & Costs Decline Y/Y
CIT Group’s third-quarter 2021 adjusted earnings per share of $1.84 outpaced the Zacks Consensus Estimate of $1.33 by a considerable margin. The bottom line represents a significant rise from 84 cents per share recorded in the prior-year quarter.
Results primarily benefited from a decline in operating expenses. Also, the company recorded provision benefits in the quarter, which was a major positive. The balance sheet position remained strong. However, lower revenues acted as a headwind.
After considering noteworthy items, net income available to common shareholders (GAAP basis) was $172.7 million or $1.72 per share, up from $82.9 million or 84 cents per share recorded in the year-ago quarter.
Revenues & Expenses Decline
Total net revenues (non-GAAP) were $432.1 million, down 8.8% year over year.
Net interest revenues were $256.8 million, down marginally year over year.
Total non-interest income was $310.9 million, down 10.5% year over year. The decline was due to a fall in rental income on operating lease equipment as well as other non-interest income.
Net finance margin improved 17 basis points year over year to 2.44%.
Operating expenses (excluding noteworthy items and intangible asset amortization) were $259 million, down 9.8% year over year.
Credit Quality Improves
In the reported quarter, the company recorded net provision benefits of $67.1 million against provisions of $63.3 million in the year-earlier quarter. Net charge-offs were $5 million, plunging 92.4% year over year.
Non-accrual loans declined 37.4% year over year to $405 million.
Balance Sheet Strong, Capital Ratios Improve
As of Sep 30, 2021, average interest-bearing cash and investment securities amounted to $10.62 billion, comprising $5.30 billion in interest-bearing cash, and $5.32 billion in investment securities and securities purchased under the agreement to resell.
As of Sep 30, 2021, Common Equity Tier 1 and Total Capital ratios (as calculated under the fully phased-in Regulatory Capital Rules) were 11.9% and 15.3%, respectively, compared with 9.9% and 13.1% at the end of the prior-year quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -8.26% due to these changes.
VGM Scores
At this time, CIT has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, CIT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.