On Jun 16, CIT Group Inc. (CIT - Free Report) touched a new 52-week high of $48.47 per share. Notably, the stock closed the day a tad lower at $48.43, almost 2% higher from the prior-day’s closing.
What Drove the Stock Up?
CIT Group’s announcement of returning $550 million worth of capital to the shareholders through utilization of buyback authorization is the primary reason that led to the 52-week high.
Basically, CIT Group announced completion of the repurchase of 818,071 shares for $38 million through an open-market repurchase program. Also, the company entered into an accelerated share-repurchase agreement with Morgan Stanley & Co. LLC, a division of Morgan Stanley (MS - Free Report) , to buy back shares worth roughly $512 million.
These were part of CIT Group’s amended capital plan, which was approved by the Federal Reserve in Oct 2016, authorizing the company to repurchase shares worth $3.3 billion. The buyback authorization was conditioned on successful closure of its divestiture of Commercial Air division and issuance of Tier 1 qualifying preferred stock.
Can the Momentum Continue?
CIT Group has come a long way since its emergence from bankruptcy in 2009. The company has been streamlining businesses with an aim to simplify operations and improve efficiency. With a gradual economic improvement, rising rates and potential lesser regulations, CIT Group is well positioned to grow. All these are expected to further support the company’s profitability.
The company’s earnings are projected to grow at the rate of 44% and 49.1% for 2017 and 2018, respectively. Further, the company’s long-term (three–five years) estimated EPS growth rate of 5% promises rewards for investors in the long run.
Also, CIT Group is well positioned to continue enhancing shareholder value through efficient capital deployment activities, given its strong balance sheet position. With the results of this year’s stress test expected to release later this week, there are chances that the company might get approval for enhanced capital deployment activities.
Further, CIT Group stock seems undervalued based on its Price/Book (P/B) ratio. The company has P/B ratio of 0.95 compared with the industry average of 1.70.
CIT Group’s shares have increased 10.6% in the last six months, outperforming the 3% rally for the Zacks categorized Miscellaneous Service industry.
These above-mentioned factors suggest that this Zacks Rank #3 (Hold) stock has further upside potential.
Stocks Worth Considering
A couple stocks in the same industry worth a look include PJT Partners Inc. (PJT - Free Report) and LendingClub Corporation (LC - Free Report) .
PJT Partners witnessed an upward earnings estimate revision of 8.5% for the current year, in the last 60 days. Its share price increased 26.2% in the last six months. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
LendingClub carries a Zacks Rank #2 (Buy). For the current year, in the last 60 days, its Zacks Consensus Estimate of loss has been revised downward. The company’s share price increased 8.5% in the last six months.
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