CIT Group reported earnings 7/28/15 and was in-line in EPS
with the street estimates of $.66, and missed on revenue by posting 406.6M,
which was off by 28.37M. CIT Group
missed on my estimate of EPS of $.78. The OneWest acquisition will be occurring
on August 3rd. This provides a catalyst for CIT Group to make
additional interest income. Expenses have increased 10M, and also earning
assets have increased .9B. The increase of expenses was mainly due to the
pending acquisition. CIT Group is
continuing to set itself up for a high interest rate environment. The synergies
achieved by buying OneWest will strengthen the likelihood of CIT Group
achieving my price target of $55.18. CIT Group stock price acted negatively to
these earnings, and is now under the buy in price. Look for CIT Group to manage
their costs over the third quarter, and this could be achieved by the synergies
of OneWest and CIT group. By doubling the size of CIT Group’s bank branch, they
are able to lower funding costs, and they add 70 branches to their commercial banking
branch.
CIT Group’s transportation business is performing well, by
having 98% of railcars being utilized, and 97% of aircraft being used. Aircraft
lending in Asia has been growing at a constant pace and CIT has been continuing
to partner with Century Tokyo Leasing. The middle market banking activity is doing
sub-par due to low M&A activity occurring in the middle markets. CIT Group is trading today at $45.42
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