CIT Viewed Cautiously After Earnings

Banking, finance, and taxes

Published: February 2, 2016 12:25 pm

Last Updated: January 13, 2020 1:44 pm

CIT Group Inc. (NYSE: CIT) has recently come under activist pressure to exit certain lines of business. Now its shares were heading south after missing earnings expectations with restructuring costs.

CIT’s core earnings sounded pretty good at $0.84 per share, versus a consensus estimate of $0.74 in earnings per share (EPS). Its GAAP EPS from continuing operations were $0.75, excluding significant items of $0.09 per share (-$0.16 for restructuring and $0.07 via a tax benefit).

24/7 Wall St. looked for analyst commentary on CIT after the report, and the first report is just not that favorable. Bill Carcache, of Nomura Securities has a Neutral rating. What is interesting is that the price target of $46.00 doesn’t sound very “neutral” against a $29.86 close and an even lower post-earnings reaction.

Net revenues came in lower than expected at $559 million, versus a $601 million consensus. Nomura said that this shortfall was driven by a lower net finance margin and slower-than-expected financing and leasing asset growth. The net finance margin came in at 3.57%, versus a consensus estimate of about 4.3% and the Nomura target of 3.73%, due to yield pressure from lower rail utilization and higher operating lease and maintenance costs.